Renewables Infrastructure Group Regulatory News (TRIG)

The Renewables Infrastructure Group Limited Announcement of Final Results for the year ended 31 December 2015

23 February 2016

The Directors of The Renewables Infrastructure Group Limited announce the results for the year ended 31 December 2015.

Highlights for the year to 31 December 2015

· Operational performance and distributions from TRIG's diversified portfolio of onshore wind and solar PV projects in line with expectations since IPO, with strong portfolio generation in 2015

· Portfolio generation capacity increased by 50% to 658MW, with 7 additional projects bringing the total to 36 investments in the UK, Ireland and France

· Directors' valuation of the portfolio at 31 December 2015 of £712.3 million (2014: £472.9 million)

· Profit before tax of £17.0 million (2014: £23.3 million), after reflecting the £20.2 million adverse impact of UK Summer Budget (Government withdrawal of revenue from Climate Change Levy Exemption Certificates)

· NAV per ordinary share of 99.0p at 31 December 2015 (2014: 102.4p), reflecting the impact of the removal of LECs in the Summer Budget

· Interim distribution of 3.11p per ordinary share for the six months to 31 December 2015 declared with scrip dividend alternative; total distributions of 6.19p per share for the year to 31 December 2015 (2014: 6.08p)

· Raised total equity capital of £316 million (before issue costs) including successful completion of Share Issuance Programme (250 million shares) in November 2015

· Pipeline of further attractive investment opportunities under consideration across multiple technologies and markets

Post year-end activities

· Acquisition of interests in a portfolio of 15 French solar PV projects for €57 million (£44 million), increasing TRIG's portfolio to 51 investments with 680MW generating capacity (with solar PV now 31% by value)

· Moving to quarterly dividends commencing with Q1 2016 (payable in June 2016), with target aggregate dividends for 2016 of 6.25p per share

· Intention to seek shareholder approval at the AGM to increase investment limit in technologies other than onshore wind and solar PV from 10% to 20%, to enable broader investment including in operational offshore wind

Helen Mahy CBE, Chairman of the Company, said:

"2015 has been a dynamic year for TRIG. Generation has been strong and the Company has shown resilience in the face of twin challenges posed by further weakening in power prices and UK government changes to renewables incentives. TRIG has significantly increased the scale and diversification of its portfolio and in December became the first renewables investment company to be included in the FTSE 250 Index. As a market leader in both portfolio scale and diversification, TRIG is well-positioned for 2016 and beyond."

Richard Crawford, Director, Infrastructure, InfraRed Capital Partners, said:

"The growth trajectory of renewables in Europe has been reinforced following the UN meetings in Paris in December. TRIG's ability to invest selectively across markets and proven technologies, combined with the potential to take advantage of maturing technologies such as offshore wind and renewables-supporting infrastructure, provides excellent opportunities for 2016."

Enquiries

InfraRed Capital Partners (Investment Manager) 020 7353 4200 (on the day)Richard Crawford, Director, InfrastructureMatt Dimond, Director, Investor RelationsPhil George, Portfolio Director 

RES (Operations Manager) 020 7353 4200 (on the day)Jaz Bains, Group Commercial DirectorSimon Reader, Head of Group Communications & Marketing

Tulchan Communications (Financial PR) 020 7353 4200Martha WalshLatika Shah

Financial Highlightsfor the year ended 31 December 2015

1. The Directors' portfolio valuation was reduced from £719.7 million by £20.2 million to £699.4 million (reducing profit before tax by the same amount) and the NAV per share for the six months ended 30 June 2015 was reduced from 102.5p by 3.9p to 98.6p as a result of the UK Summer Budget in July 2015, which included inter alia the removal of the benefit to renewables generators of selling Levy Exemption Certificates, effective 1 August 2015.

2. The second interim dividend for 2015 is scheduled to be paid on 31 March 2016.

3. The NAV per share at 31 December 2015 is calculated on the basis of the 732,838,095 Ordinary Shares in issue at 31 December 2015 plus a further 736,190 Ordinary Shares to be issued to the Managers in relation to part-payment of Managers' fees in the form of Ordinary Shares.

Section 1

Chairman's Statement

Introduction

On behalf of the Board, I am pleased to present the 2015 report and accounts for The Renewables Infrastructure Group Limited ("TRIG" or the "Company", and with the holding companies and investments, the "Group").

TRIG manages a diversified renewables infrastructure investment portfolio and is a leader by market capitalisation, net asset value and generation capacity among the six London-listed investment companies focused on operational renewable energy projects. TRIG is the only one of its peer-group offering the joint capabilities of a specialised investment manager and a specialised operations manager, in the form of InfraRed Capital Partners Limited ("InfraRed") and Renewable Energy Systems Limited ("RES"), both leading providers in their respective areas.

2015 has been a particularly dynamic year for TRIG. Generation has been strong and the Company has shown resilience in the face of twin challenges posed by continued weakness in power prices and UK Government changes to renewables incentives. TRIG has meanwhile significantly increased the scale and diversification of its portfolio, with generation capacity increasing by 50% to 658MW and portfolio value by 51% to £712.3 million. In December, it became the first renewables investment company to be included in the FTSE 250 Index. As a result of the post-balance sheet date investment in 15 French solar projects, TRIG's portfolio now stands at 51 projects with total generating capacity of 680MW. The operating results, in difficult market conditions for renewables, provide further confirmation of the quality of TRIG's portfolio and the soundness of its strategy of increasing and further diversifying its investment portfolio, focused on proven technologies in the UK and selected jurisdictions in Northern Europe to support the payment of attractive long-term dividends. Operationally, in 2015 (and since IPO as a whole), the portfolio has performed closely in line with the Company's expectations. Total Shareholder Return (based on dividends paid and share price performance) for 2015 was 4.4%[1], compared to 1.0% for the FTSE All-Share Index[2]. Details of the portfolio's operating and financial performance are set out in the Strategic Report, which has been reviewed and approved by the Board of Directors on 22 February 2016.

Changes following the UK general election to support schemes for new renewables projects may, for a period, reduce the volume of new development of UK onshore wind and solar PV projects. Over time this may impact the potential pipeline for operational projects available for acquisition. However, there is a significant volume of both UK onshore wind projects and, albeit to a lesser extent, UK solar PV projects still owned by developers and/or utilities which may seek to recycle their investments. As a result, TRIG expects to continue to see attractive opportunities for acquisition in the UK as well as in France and in other targeted countries in Northern Europe in these technologies.

The Board also notes that offshore wind, a large-scale strategic energy resource both in the UK and in other countries in Northern Europe, provides additional opportunities for investment. There is currently approximately 11GW of installed capacity in Europe across 80 projects, the majority of which are in the UK and Germany, which are world leaders in this sector. It is also notable that the development of offshore wind in the UK continues to enjoy Government support and the volume of installed capacity, currently 5GW, is expected to double by 2020. The sector has now built up meaningful operational and financial track records and operating projects are becoming available for investment. TRIG is currently limited to investing no more than 10% of its portfolio by value outside the technologies of onshore wind and solar PV, as set at IPO in 2013. However, the Board believes that, with the growth in the size of the TRIG portfolio, offshore wind projects with operating history are now appropriate for investment, providing further diversification and scale as well as attractive cash flows and returns. Accordingly, the Board proposes to put to shareholders a proposal at the Annual General Meeting in May 2016 to amend the investment policy of the Company such that up to 20% of its portfolio by value may be invested in sectors other than onshore wind and solar PV to enable TRIG better to accommodate investment in offshore wind. Potential investment areas may also include other generating technologies or supporting infrastructure, such as back-up power generation, storage or demand-side response, where the Investment Manager is also seeing increased opportunity. Further information on this proposed amendment to the investment policy is set out in the Strategic Report in Section 2.5.

Financial Results and Performance

Financial results

The Company has prepared financial statements for the year to 31 December 2015 in accordance with IFRS, including the amendments to IFRS 10.

Profit before tax for the year was £17.0 million (2014: £23.3 million) and earnings per share were 3.0p (2014: 6.2p). As reported in our interim results, the measures announced in the July UK Summer Budget (predominately the removal of the benefit to renewables generators of selling Levy Exemption Certificates from 1 August 2015) reduced our portfolio valuation and profit for the year by £20.2 million and reduced earnings per share by 3.9p3. Cash received from the portfolio by way of distributions, which include dividends, interest and loan repayments, was £42.4 million (2014: £35.3 million). After costs, net cash inflows from the investment portfolio of £34.0 million (2014: £30.6 million), as measured under the Expanded Basis, covered the total cash dividends paid during the year by approximately 1.2 times, with the lower level of dividend cover reflecting the impact, in particular, of significantly lower wholesale power prices. £7.2 million of surplus cash generated by the portfolio during the year was reinvested in new portfolio projects. Alongside surplus cash generated, new equity capital raised (net of costs) of £310.8 million enabled acquisitions in the year of £255.6 million (including acquisition costs), repayment of revolving acquisition debt of £60.1 million and an increase in cash balances of £2.3 million to £15.2 million.

The net asset value ("NAV") per share was 99.0p at 31 December 2015 which is a reduction of 3.4p from the 102.4p NAV as at 31 December 2014 - the reduction mainly reflecting the impact of the UK Summer Budget, in particular the removal of LECs-related revenue (explained further below under "Risks and Uncertainties"). During the year, the Company raised £315.7 million before expenses, successfully completing the Share Issuance Programme of 250 million new shares launched in December 2014, with issues in March, April, July and November 2015. This last equity issuance also utilised most of the Company's annual tap issuance authority. Ordinary shares in issue, including these offerings as well as shares issued by way of scrip dividend and as part payment of fees to the Managers, increased to approximately 732.8 million from 415.5 million at 31 December 2014.

Total management fees accruing to InfraRed Capital Partners Limited (the Investment Manager) and Renewable Energy Systems Limited (the Operations Manager) amounted to £6.1 million in the period, comprising their management and advisory fees based on 1.0% per annum in aggregate of the applicable Adjusted Portfolio Value, with 20% of the fees being paid through the issue of Ordinary Shares.

For 2015, using the methodology of the Association of Investment Companies ("AIC"), the Company's Ongoing Charges Percentage was 1.20% (2014: 1.25%), reflecting the benefits of the expanded asset base.

More details of the financial performance are set out in the Strategic Report in Section 2.6, as well as in the financial statements that follow.

Portfolio Update and Acquisitions

The Board is pleased to report that, as in prior periods since IPO, the operational performance of the portfolio continues to meet the Company's expectations. While different months and seasons during the year continue to exhibit variable energy outcomes based on prevailing weather conditions, TRIG's portfolio diversification, both by geography and by generating technology, results in a more predictable overall outcome being achieved for the year as a whole. Total electricity production (pro rata to TRIG's equity interests in each project) in 2015 increased by 65% to 1,344GWh (2014: 814GWh), reflecting mainly the increase in the scale of TRIG's generating portfolio, as well as strong underlying operating performance. Total portfolio production was 2.3% above P50 forecasts for the year, with the British Isles onshore wind projects contributing well-above forecast levels of production partly offset by below-forecast performance for solar PV and French wind, reflecting lower prevailing radiation levels and wind speeds in those sectors across the year as a whole.

During the year, TRIG successfully completed new investments in seven operating projects for an aggregate consideration of approximately £255 million, increasing the portfolio to 36 projects and net generating capacity to 658MW, an increase of 50% on the capacity as at the end of 2014. Most notably, TRIG invested £246 million via a 49% equity interest and a mezzanine debt investment in six large Scottish operational wind farms in a new partnership alongside Fred. Olsen Renewables, a major developer of wind farms in the UK and Scandinavia. TRIG also acquired a solar park in Cornwall from RES, the Company's Operations Manager, for approximately £9 million.

Additionally, just after the year-end, TRIG acquired interests in 15 French solar parks in an investment partnership with Akuo Energy, a major independent French renewable energy developer. This investment of €57 million (£44 million) adds further feed-in tariff revenues to TRIG's portfolio (i.e. long-term fixed-type revenues with inflation-linkage) and brings TRIG's current portfolio to 51 projects and 680MW of net generating capacity across the UK, France and Ireland.

Further details of operational performance, market conditions and acquisitions and strategy are set out in the Strategic Report which follows.

Valuation

The Investment Manager has prepared a fair market valuation for each investment in the portfolio as at 31 December 2015. The valuation is based on a discounted cash flow analysis of the future expected equity and loan note cash flows accruing to the Group from each investment. The valuation uses key assumptions which are set by the Investment Manager using its experience and judgement having taken into account available comparable market transactions and financial market data in order to arrive at a fair market value.

The Directors have satisfied themselves as to the methodology used and the assumptions adopted, and have approved the valuation of £712.3 million for the portfolio of 36 investments as at 31 December 2015. This valuation compares with £472.9 million for the portfolio of 29 investments as at 31 December 2014. The year-end valuation incorporates several changes arising during the year, notably the removal of the exemption for renewable energy generators from the UK Climate Change Levy announced in July 2015 and market forecasts for lower-than-expected power prices, predominately as a result of reduced forecasts for natural gas prices, which have a major effect on wholesale electricity pricing in the UK and Ireland. As in 2014, this has been partially offset by the reduction in applicable valuation discount rates for renewable energy projects, as reported at the half year. Further details of the valuation, including sensitivities, are set out in Section 2.7 of the Strategic Report which follows.

Distributions

The Board has declared a second interim dividend for the six month period ended 31 December 2015 of 3.11p per share in line with the Board's target to provide an annual inflation-linked step-up. When combined with the first half interim dividend of 3.08p per share, this equates to a distribution of 6.19p in respect of the full year (2014: 6.08p). The second half interim dividend is payable to those ordinary shareholders on the register on the record date of 19 February 2016 and will be paid on 31 March 2016. A scrip dividend alternative is also being offered and details will be sent shortly to shareholders in a separate circular.

In 2016, the Company intends to pay quarterly interim dividends (from semi-annual dividends hitherto). The Company is targeting an aggregate dividend for the financial year to 31 December 2016 of 6.25p per share, reflecting a 1.0% inflationary increase above the 6.19p per share with respect to the year to 31 December 2015. This targeted dividend would be paid in four equal quarterly instalments of 1.5625p per share. The first quarterly dividend is expected to be paid in June 2016 with respect to the three months to 31 March 2016 and the other three quarterly dividends for 2016 are expected to be paid in September 2016, December 2016 and March 2017.

Risks and Uncertainties

The Board believes that TRIG is well-positioned with its diverse portfolio strategy and its experienced management, provided by InfraRed and RES, to benefit from the long-term returns available from renewables infrastructure as well as to mitigate and/or make adjustments for the risks it is most likely to confront in its industry.

While there are a range of factors monitored by the Managers, the Board considers that the key elements of risk impacting on the future performance of the operating assets in which the Company invests are (1) portfolio energy yield variability; (2) wholesale power prices and (3) adverse regulatory change.

(1) Portfolio energy yield: Based on the performance to date, the Board believes the variability encountered from the energy sources of wind and solar have been successfully mitigated - both naturally by the tendency for weather conditions to even out over time and via the Company's diversification policy, both by geography and technology. Recent swings in weather outcomes have not had a negative impact on TRIG's overall performance.

(2) Wholesale electricity prices: Further reductions in forecast wholesale power prices in the UK have continued to impact on financial performance, although this has been partially mitigated by a majority of the Company's project-level revenues being derived from fixed power purchase agreements, feed-in tariffs and renewable obligation certificates. With the current oversupply of fossil fuels, there is a very soft market in these commodities with the possibility of further reductions feeding through to power prices. Conversely, there is also the opportunity for future upside over the longer term once production and demand come into balance. The Company may also continue to invest in projects that provide fixed-type revenues, such as the solar investment in France announced following the year-end.

(3) Regulatory change: As TRIG currently has a fully operating portfolio of renewable electricity generating projects (and with an allocation limit of 15% of portfolio value to pre-operational projects), TRIG carries few risks associated with the planning and commissioning of projects. This is an important risk mitigant as governments seek to reduce costs as deployment targets approach realisation, and manage down the level of incentives available for potential new developments. The main government-related risk to TRIG is the enactment of regulations or tax changes that might affect income from existing electricity generating projects. 2015 has seen some amendments impacting on the renewables sector, including the unexpected removal of the benefit to renewables generators of Levy Exemption Certificate ("LEC") sales in the 2015 UK Summer Budget. In addition, the UK has seen several reductions to the level of future incentives on offer for new project developments in the medium term for the solar PV and onshore wind sectors, while continuing to incentivise further development of technologies such as offshore wind.

There has also been considerable international debate on the role of governments in the promotion of renewable energy while balancing long-term energy security and cost-efficiency with meeting decarbonisation goals. This culminated in the UN COP 21 conference at the end of the year which was positively received, bringing an unprecedented number of governments to the table, and resulting in a number of practical measures being agreed to keep decarbonisation high on both national and international agendas as critical "work-in-progress", while recognising the impracticability of agreeing a one-off, inflexible regime between countries with a broad range of specific circumstances.

2015 also saw the governments of major economies, including the UK, seeking to reform international tax rules regarding the OECD/G20 Base Erosion and Profit Shifting ("BEPS") project. The Company, along with others in the infrastructure sector, has taken part in a consultation process in the UK led by the UK Treasury, and continues to engage with the UK tax authorities as the proposals develop.

There is further discussion on risk factors and risk management in the Strategic Report in Section 2.10.

Environmental, Social and Governance

Since its inception in 2013, TRIG has been designed and managed in order to provide a socially conscious, well-managed, high-yielding investment opportunity.

TRIG's current renewables investments power the equivalent of 330,000 households (equivalent to more than 1% of the UK's total household power supply) and prevent the emission of 520,000 tonnes of CO2 annually. Under the aegis of its experienced Managers, who continually evaluate the performance of a range of underlying contractors, the Group continues to pursue excellence in details of environmental efficiency and social sensitivity across all aspects of the portfolio, through the landscaping of our wind farms and solar parks, as well as in the engagement with our local communities, whether it be in improving local footpaths, funding play facilities, senior citizen events and cultural groups, or in arranging educational visits to our sites.

As a member of the Association of Investment Companies ("AIC"), TRIG reports governance against the AIC Code of Corporate Governance endorsed by the Financial Reporting Council. The Company continues to evaluate best practices in the industry as a leading participant in the fast-growing renewables segment of the infrastructure investment market.

In 2015, TRIG had more than 100 meetings with major existing and potential investors and hosted a number of institutional investor representatives at the RES control centre in Glasgow, showcasing the operational capabilities of TRIG's Operations Manager, as well as at one of its wind farms. During the year, TRIG also welcomed several major international investors to its shareholder register. The Board prioritises its engagement with shareholders and aims to continue to spearhead disclosure and transparency in our sector as it evolves in the years ahead.

As part of good corporate governance, all of the Directors will offer themselves for re-election at the Annual General Meeting to be held on 4 May 2016.

Outlook

In conjunction with the Investment Manager, the Board has reviewed the Company's overall performance including its portfolio cash flow generation and forecasts. As discussed above, 2015 has seen a reduction in cash generation as a result of the removal of the Levy Exemption Certificate benefits in the UK and a fall in wholesale power prices (and reduction in the long-term power curve). In spite of this backdrop, TRIG achieved a cash cover of 1.2x (net cash generated from operations over cash dividends paid) in 2015 and targets an increase in its full year dividend for 2016 in line with inflation. In addition, through a careful investment strategy, TRIG aims to capitalise on further opportunities to enhance the diversification of the portfolio and achieve scale efficiencies, while also improving stock liquidity.

In the year ahead, the UK renewables industry is likely to continue to adapt to the ongoing challenges of reduced wholesale power prices and the re-setting of the Government's energy strategy, while elsewhere in Europe and particularly in France, renewables appear to have a clearer immediate path for growth. Against this back-drop, TRIG's ability to look across markets and technologies is coming into its own. With its proven operational portfolio of 51 projects exhibiting market-leading scale and diversification across technologies and markets, the complementary capabilities of its Managers and the valued support of its shareholders, TRIG is well-positioned to deliver attractive returns in 2016 and beyond.

Helen Mahy CBE

Chairman

22 February 2016

Section 2

Strategic Report

2.1 Introduction

ContentsThis Strategic Report sets out:

· 2.2 - the Company's Objectives;

· 2.3 - the Strategy adopted to deliver these objectives;

· 2.4 - the Company's Business Model;

· 2.5 - the Investment Policy and Current Acquisition Strategy

· 2.6 - the Operational and Financial Review for the year, including KPIs;

· 2.7 - the Directors' Valuation of the Group's portfolio as at 31 December 2015;

· 2.8 - the current Outlook;

· 2.9 - the Ten Largest Investments;

· 2.10 - the key risks and mitigants relating to the Group and its investments; and

· 2.11 - the policies, approach and achievements adopted in respect of Corporate Social Responsibility

References in this report to the "Company" or "TRIG" mean The Renewables Infrastructure Group Limited (and together with its holding companies and investments, the "Group").

Overview

TRIG is a leading renewable energy infrastructure company investing in multiple renewable energy technologies, jurisdictions and climate systems in Europe. A Guernsey company, TRIG was launched on the London Stock Exchange through an Initial Public Offering in July 2013, raising £300 million which was invested in an initial portfolio of 18 wholly-owned projects in the UK, France and Ireland.

Since the IPO, the Company has raised approximately a further £430 million through equity issues and increased the portfolio by acquiring a further 33 projects creating a diversified portfolio of 51 onshore wind and solar photovoltaic ("PV") projects in the UK, France and Ireland[3]. TRIG continues to review a broad pipeline of projects with a view to further investment and diversification.

TRIG is targeting an attractive long-term yield with NAV upside with an annualised total return target of 8 to 9% (net of expenses and fees) supported by reinvestment of surplus cash flows available from the diversified portfolio after payment of dividends[4]

With highly experienced Managers TRIG has access to leading resources in specialised investment and operations teams at InfraRed and RES which deploy resources together in the management of TRIG and its portfolio. Shareholders benefit from a competitive and simple fee structure that is the result of the operating scale of both of the Managers, reflecting their committed, long-term approach to the infrastructure and renewables markets.

TRIG's Investment Manager - InfraRed Capital Partners Limited ("InfraRed"), is a leading international manager in the alternative investment segments of infrastructure and property. The total headcount of the InfraRed group is approximately 120 and the infrastructure team now comprises 50 staff in offices in London, Hong Kong, New York, Paris, Seoul and Sydney. InfraRed has a core team of seven dedicated to advising the Group on financial management, sourcing and implementing new investments and providing capital-raising and investor relations services. In addition, four InfraRed managing partners sit on TRIG's Investment Committee and the core team also has access to a range of other InfraRed partners and staff in both the infrastructure team and in central functions in support of the Group and its investments. InfraRed has been investing in infrastructure and/or managing infrastructure dedicated funds for over 18 years, including the established HICL Infrastructure Company Limited, which invests in predominantly social infrastructure both in the UK and internationally and is also listed on the London Stock Exchange. InfraRed is authorised and regulated by the Financial Conduct Authority.

TRIG's Operations Manager - Renewable Energy Systems Limited ("RES"), is a leading global developer, constructor and operator of renewable energy infrastructure projects with operations in 14 countries and over 1,300 employees globally. The RES team has more than 30 staff providing portfolio-level operations management, supporting the evaluation of investment opportunities for the Group and providing project-level services in the UK, Ireland and France. RES has been developing, constructing and operating renewables for over 30 years, RES has in total developed and/or constructed more than 200 wind, solar and energy storage projects totalling more than 10GW of capacity.

2.2 Objectives

TRIG was created in 2013 with the purpose of investing principally in a range of diversified operational assets which generate electricity from renewable sources, with an initial focus on onshore wind farms and solar PV parks in the UK and Northern Europe, and with a view to providing investors with long-term, stable dividends, while preserving the capital value of its investment portfolio through re-investment of surplus cash flows after payment of dividends.

Financial Objectives

The key financial objectives of the Group are set out as follows:

· To provide shareholders with attractive long-term dividends. TRIG aims to continue to pay attractive dividends, with inflationary increases over the medium term. This assumes in particular the steadying of and resumption of growth in UK and European wholesale power prices and a continuation of TRIG's on-target operating performance. Dividends are paid gross as the Company is registered in Guernsey. The Company also offers shareholders a scrip dividend alternative to cash dividends as this can be advantageous to certain investors;

· To target long-term annualised total return of 8% to 9%. At the time of the IPO, the Company targeted a total internal rate of return ("IRR") of 8% to 9% (net of expenses and fees) on the issue price of its Ordinary Shares to be achieved over the longer term via active management of the investment portfolio and reinvestment of excess cash flow. In considering the ability of the Company to achieve its long-term returns, the Investment Manager uses its judgement to assess a number of factors such as the potential for recovery of forecast power prices in the longer term, inflation rates and further movements in discount rates, as well as the potential upside from repowering and/or otherwise enhancing the performance or extending the life of projects in the portfolio and from scale efficiencies across an expanding portfolio given the Company's growth strategy;

· To maintain focus on cash cover. Cash cover (over dividends paid) in 2015 was approximately 1.2x. Cash cover is expressed after accounting for cash utilised to pay down project-level debt within the investment portfolio (equivalent in 2015 to 0.6x the dividends paid). This structured reduction in project-level debt benefits the NAV in each period. Recent lower wholesale power prices have reduced the level of cash cover in 2015. TRIG aims to maintain cash cover over the medium and long-term, although short-term levels of cover may vary based on factors such as weather conditions, prevailing power market prices, foreign exchange rates, portfolio asset mix and gearing levels. TRIG seeks to mitigate the effects of variability through investment diversification and some financial hedging;

· To provide an investment return with positive correlation to inflation expected to be obtained through exposure to government support regimes which are generally inflation-linked and to power prices, which are assumed in the long term to be positively correlated with inflation (described in more detail in Section 2.7);

· To maintain prudent financial management including the valuation policy for the existing portfolio and new investments, the analysis and utilisation of forecasts, controls on project-level and Group expenditure, financing arrangements and foreign exchange hedging policy. As the Group has overseas investments, it maintains a foreign currency hedging policy utilising forward contracts for euro-sterling in relation to the current portfolio (explained in Section 2.6); and

· To grow its investment portfolio to enhance diversification, increase share liquidity and obtain further scale efficiencies. The Company finances this portfolio growth through internal cash generated but also by issuing further shares to existing and new investors at or above the current NAV per share plus issue costs, thus avoiding NAV dilution. Further acquisitions may achieve reduced portfolio risk by additional diversification by geography, jurisdiction, power market and generation technology.

Non-Financial Objectives

The key non-financial objectives of the Group are:

· To maintain a business model which benefits from trends in energy and infrastructure with sustainable opportunities for both portfolio management and portfolio growth, based on the economies and societies of the countries in which the Company invests;

· To build and maintain strong relationships with key stakeholders of both the Company and the Group's investments, including investors, national and local governments, local communities, project developers, vendors, key contractors and providers of finance. Consistent, effective engagement with a broad range of key stakeholders and adopting a positive approach of partnership is expected to contribute meaningfully to the Company's ability to deliver targeted long-term investment returns;

· To manage its affairs in accordance with the Company's Corporate Social Responsibility statements and policies; and

· To provide leadership in enhancing the understanding of investment in the renewables sector through appropriate disclosure and engagement with existing and potential investors, thereby further promoting interest in investment in TRIG as a benchmark investment vehicle in this expanding sector.

2.3 Strategy

Portfolio Construction within the Renewables Market

TRIG's investment approach is based on accessing the growing renewables market resulting from the long-term commitment of the UK and other Northern European countries to increasing the supply of cleaner, more secure and sustainable energy. TRIG pursues this opportunity via managing and expanding a diversified portfolio of power generating assets across established technologies, different weather systems and electricity markets. This strategy of portfolio growth and diversification supports the long-term investment proposition of delivering stable dividends together with NAV resilience.

The Renewables Market Growth Opportunity

Growth of the renewable energy infrastructure market is supported by a long-term global shift - in particular in the OECD and the larger emerging economies - towards achieving economic growth with sustainability. Continuing increases in human population, urbanisation, industrial and agricultural production and consumption offset the benefits of ongoing energy efficiency improvements. Following the widely covered United Nations Framework Convention on Climate Change (or "COP 21") round of discussions in Paris in late 2015, refreshed initiatives have been launched to reduce or reverse the human impact on the climate and living environment from fossil fuel usage and to ensure a secure energy supply. The Company sees further global support for the promotion of decarbonisation in 2016 and beyond, with widespread renewable energy generation being an important initiative alongside improved demand-side response, efficient back-up generation capacity and more flexible grid networks.

The roll-out of renewable energy generation projects and supporting technologies is expected to continue across all major markets, supported by a range of government programmes as well as by increasing technological and supply chain improvements and cost efficiencies. In 2015, for the first time, more than 50% of newly installed electricity generating capacity globally was in the form of renewable energy infrastructure.

Diversification - Across Established Renewables Technologies

TRIG adopts a strategy focused on investing in operational renewable energy generation projects, with a current focus on the onshore wind and solar PV sectors - we believe these represent established renewables technologies with an effective combination of proven operating cost histories and a healthy diversified pipeline of investment opportunities. In addition, although among other fast-growing technologies, offshore wind is now producing a significant share of renewable energy. In the UK there are operating offshore wind farms with a combined 5GW, and in Germany a further 3GW of operating projects with a number of sites having now established an operating track record of several years.

In the European Union, the majority of new power generation installations are in wind and solar PV. Of a total of 28.9GW of new capacity installations across the EU, onshore wind and offshore wind represented approximately one third and one-tenth (or 9.8GW and 3.0GW) respectively while solar PV represented nearly another third (8.5GW). All other renewables accounted for less than 2% of new power capacity. New gas and coal facilities represented the bulk of the remainder with a combined 23%. The bulk of new wind installations in 2015 were in Germany (47%), with significant contributions from Poland (10%), France and the UK (approximately 8% each)[5].

The UK's new annual capacity additions have been dominated by wind (both onshore and offshore) and, particularly in the last few years, solar PV. Onshore wind capacity is gradually approaching the 2020 projected target of 11GW to 13GW as indicated under the previous Government in 2014, while solar PV has been on a faster upward trajectory that, if continued, would clearly have surpassed the equivalent target capacity of 11GW to 12GW by 2020. Offshore wind has considerable further capacity to be installed with approximately 5GW of installed capacity towards a 2020 projection of 10GW[6].

The high capacity (or "load") factors of wind compared to solar PV make it the leading contributor among renewable sources to total UK electricity production, reaching nearly 10% of production in the third quarter of 2015.

TRIG is currently permitted under its investment policy to invest up to 10% of the portfolio in technologies beyond onshore wind and solar PV. The Investment Manager is reviewing further technologies which would increase diversification and where the risk-adjusted returns may become attractive as market dynamics evolve. This may include offshore wind for which the level of operational risk can now be more clearly defined based on the track record of existing projects and improvements in technology and the supply chain. The UK Government projects total investment in UK offshore wind projects of between £16 billion and £21 billion between 2014 and 2020. Other technologies may also include other types of generation infrastructure (e.g. hydropower or landfill gas) or supporting technologies such as back-up power generation, storage or demand-side response, depending on the availability of projects for investment which exhibit sufficient scale of opportunity, expected returns and risk profile appropriate for TRIG.

Accordingly, the Board, with recommendation from the Managers, proposes to put to shareholders a proposal at the Company's Annual General Meeting in May 2016 to amend the investment policy of the Company such that up to 20% of its portfolio by value may be invested in sectors other than onshore wind and solar PV.

Diversification - Across UK and Northern European Power Markets

TRIG's investment strategy also provides for diversification across electricity markets. TRIG has substantial protection in its revenues from movements in wholesale power prices in the short and medium term as a result of receiving a high proportion of its revenue from power purchase agreements with fixed prices, feed-in tariffs and Renewables Obligation Certificates. In the longer term, TRIG, based on its current portfolio, will have greater exposure to future wholesale electricity prices. TRIG also has the benefit of being diversified across three separate power markets of Great Britain, the Single Electricity Market (of The Republic of Ireland and Northern Ireland) and France.

Over the longer term, the world demand for power is expected to grow with population, economic growth and factors such as increased electrification of transportation. This, combined with Europe's requirement to upgrade old power plants and grid networks, including the decommissioning of old generation facilities (coal, gas and nuclear), green subsidies (both for generators and consumers in the form of energy efficiency grants) and carbon pricing for fossil fuel based generation are likely to mean UK and European prices will remain at relatively high levels, at least relative to the United States.

Diversification - Across Regulatory Regimes and Contract Types

TRIG aims to invest across multiple energy markets in projects whose revenues are supported by a strong government commitment to renewable energy generation as a key part of their energy mix. While investments in the UK, France and Ireland form the current portfolio, a number of other markets such as Scandinavia, Benelux and Germany offer a profile which may be attractive to TRIG.

TRIG's portfolio revenues reflect the different regulatory jurisdictions in which TRIG is invested with revenue sources ranging from contracted feed-in tariffs ("FITs"), renewables obligation certificates ("ROCs"), embedded benefits and a variety of wholesale power purchase agreements ("PPAs") with contracting counterparties which are, for the most part, major utilities.

In the current portfolio, the majority of near-term project revenues (2016 projected revenues: 71%) are expected to come from fixed-type, contracted revenues, for example feed-in tariffs, fixed price PPAs, or the sale of ROCs (with, accordingly, greater stability and predictability of revenues) or other revenue sources not linked to wholesale power prices, while expected near-term project revenues linked to wholesale power prices (2016 projected revenues: 29%) are in the minority. Some of these revenues have floor price arrangements.

In the longer term (in the absence of further contracting or re-contracting of the revenues), it is anticipated that the majority of revenues will be based on variable market prices (although some of these may be contracted based on, for example, season-ahead or month-ahead pricing). The UK, as part of its Electricity Market Reform, has been moving towards a new fixed-type "Contracts-for-Difference" programme for new renewables development, which, if extended beyond the initial auction round completed in early 2015, may provide further investment opportunities in the UK market. The wholesale power element of PPAs is normally based on a combination of season and/or month ahead pricing against established market indices and a small discount against the market price is applied.

Diversification - Across Weather Systems

From a meteorological perspective, while short-term volatility is to be expected, wind and solar resources demonstrate a high degree of predictability over the long term. In addition, TRIG's portfolio demonstrates the benefit of diversity as a result of the geographical spread of the projects and the energy yield performance of solar and wind technologies not being positively correlated.

Given the complexity of wind flows, even within a specific geographical area, energy yield outcomes do vary from location to location and from time to time but these tend to even out over the long-term. For solar, the key factor driving irradiation levels is latitude, although the precise meteorological conditions (prevailing local irradiation intensity, duration and temperature) have a bearing on the energy output performance. Weather risk can be reduced within a portfolio by combining a large number of plants spread over a wide geography and by combining wind and solar.

The chief differences in yield outcome across the TRIG portfolio occurs because of (1) the inclusion of both wind and solar technologies which are not correlated and (2) the relative impact of the North Atlantic weather patterns on the British Isles (more exposed to the prevailing oceanic winds and cyclonic systems from the south-west) versus Southern France (where the influence of the Mediterranean prevails). Specifically for wind, the dominant winds in Southern France (such as the "mistral") are associated with gap flows which are formed when north or north-west air flow (associated with cyclogenesis over the Gulf of Genoa) accelerates in topographically confined channels such as the river valleys descending from the Alps, Pyrenees or the Massif Central.

With stronger summer solar irradiation counterbalancing the lower typical summer wind speeds versus the winter, the portfolio also has the benefit of a more balanced revenue mix through the year than would be the case for a fund investing only in either wind or solar. In TRIG's portfolio in a typical year, approximately 70% of the total annual solar production is expected to occur in the six months between April and September (against 40% for wind) and approximately 30% between October and March (against 60% for wind).

TRIG is able to mitigate the risk of miscalculating energy output (and therefore mispricing) by buying projects with some operating history (the portfolio has on average more than 5 years of operating track record) as well as by having acquisition price adjustment mechanisms based on yield performance on newer projects.

A Portfolio of Long-Term Operating Projects

As at 31 December 2015, the TRIG portfolio comprised 36 investments in the UK, Republic of Ireland and France, including 24 onshore wind projects and 12 solar photovoltaic projects:

NOTE: New onshore wind project investments made since 1 January 2015 are asterisked.

A Diversified Portfolioby geography, jurisdiction, energy market, technology and revenue sourceThe TRIG portfolio comprises a diverse range of assets across different energy markets, regulatory jurisdictions, generating technologies, revenue contracts and/or subsidy sources, as well as a variety of geographic areas with differing meteorological conditions (affecting wind speeds and solar irradiation applicable to each of TRIG's projects), as illustrated in the analysis below, as at 31 December 2015 and also as adjusted for the addition to the portfolio in January 2016 of the investment in the Akuo Energy French solar portfolio (valued at cost)[10]:

Portfolio by Jurisdiction (Electricity Market)

Portfolio by Technology / Weather System

Portfolio by Project Revenue Type (based on 2016 modelled revenues)

2.4 Business Model

Introduction

The Company is a Guernsey-registered investment company, with an independent board of directors and with its shares listed on the London Stock Exchange. Through the group structure, the Company owns a portfolio of renewable energy infrastructure investments in the UK, Ireland and France and is seeking to protect and enhance the income from and value of the existing portfolio through active management and sourcing of new investments which enhance the diversity and scale of the portfolio, utilising the expertise of market-leading Investment and Operations Managers appointed by the Company. The Company has a 31 December year-end, announces interim results in August and full year results in February. Having paid dividends semi-annually since IPO in 2013, the Company proposes to pay dividends quarterly commencing from the dividend with respect to the first quarter to 31 March 2016, payable in June 2016.

Group Structure

The Company is a self-managed Alternative Investment Fund under the European Union's Alternative Investment Fund Managers Directive. The Company has a board of four independent non-executive directors whose role is to manage the governance of the Company in the interests of shareholders and other stakeholders. In particular, the Board approves and monitors adherence to the investment policy, determines risk appetite of the Group, sets Group policies and monitors the performance of the Investment Manager, the Operations Manager and other key service providers. The Board meets a minimum of four times per year for regular Board meetings and there are a number of ad hoc meetings dependent upon business need. In addition the Board has four committees covering Audit, Nomination, Remuneration and Management Engagement.

The Board takes advice from the Investment Manager, InfraRed, as well as from the Operations Manager, RES, on matters concerning the market, the portfolio and new investment opportunities. Day-to-day management of the Group's portfolio is delegated to the Investment Manager and the Operations Manager, with investment decisions within agreed parameters delegated to an Investment Committee constituted by senior members of the Investment Manager. The Company has management agreements in place with the Investment Manager and the Operations Manager which can be terminated at 12 months' notice from 29 July 2018.

The key roles of the Investment Manager and the Operations Manager are set out below:

Further details on the Investment Manager and the Operations Manager are set out in Section 2.1 and in Section 2.6 with respect to fees. Dexion Capital (Guernsey) Limited provides Company Secretary and Administrator services.

Other key service providers to the TRIG Group include Canaccord Genuity Limited and Liberum Capital Limited as joint brokers, Tulchan Communications LLP as financial public relations advisers, Carey Olsen as legal advisers as to Guernsey law, Norton Rose Fulbright LLP as legal advisers as to English law, Capita Registrars (Guernsey) Limited as registrars, Deloitte LLP as auditors, and National Australia Bank and Royal Bank of Scotland as lenders to the Group via the £150 million revolving acquisition facility.

The Board reviews the performance of all key service providers on an annual basis.

Making New Portfolio Investments

When seeking to acquire an investment, the proposition is subject to a two-stage process. It is considered and recommended by the Advisory Committee which includes representatives of both the Investment Manager and the Operations Manager, and then it is fully assessed by the Investment Committee of the Investment Manager which, for investments within the Manager's delegated authority (with agreed limits set by the Board), gives the final approval before an investment may proceed. These committees may meet on a number of occasions before an investment is acquired by the Group. Commercial and technical due diligence is undertaken by the Investment Manager with support from the Operations Manager on aspects such as energy yield assessment, off-take contract arrangements, maintenance and other operational costs. Third party legal and technical due diligence is commissioned as appropriate to support the acquisition.

An important characteristic of the Group is that it is well-positioned to acquire assets from its Managers, in particular RES in relation to which TRIG enjoys a right of first offer for onshore wind and solar assets developed in the UK and Northern Europe. With no representatives from RES on the Investment Committee, decisions on acquisitions from RES under the Company's Right of First Offer Agreement are taken at arms' length from the Operations Manager, while any acquisitions from other funds managed by InfraRed would require prior unanimous recommendation by the Advisory Committee and also approval by TRIG's independent board, together with an independent valuation, as well as utilising prudent internal conflict management procedures established at InfraRed.

The Company is focused on owning operational, yielding projects although the Managers expect that there will be opportunities where it will be advantageous for the Company to invest in projects prior to their completion and grid connection. While the Company is currently invested in onshore wind and solar PV projects, there are investment opportunities in other maturing generating technologies in the UK and Northern Europe, notably offshore wind, as well as back-up power, storage or demand-side response infrastructure.

The Company's investment policy does not permit the cost of works on projects under development or construction (and not yet operational) to which portfolio companies are exposed to exceed in aggregate 15% of overall portfolio value. At 31 December 2015 all construction was complete and all projects were operational. In respect of investments in portfolio companies which have assets under development or construction (including the repowering of existing assets), the cost of works on such assets under development or construction (and not yet operational) to which portfolio companies are exposed may not in aggregate account for more than 15% of overall portfolio value, calculated at the time of investment or commitment.

Given the strong pipeline of available assets, the characteristics of new investments are not expected to deviate materially from the underlying risk and reward characteristics of the existing portfolio, and therefore the Managers do not expect that new investment cash flows would be subject to risk or revenue dynamics which are substantially different from the profile already established.

2.5 Investment Approach and Policy 

Investment Approach

TRIG's investment approach is based on the following two factors:-

The renewables market opportunity: 

o long-term public and political commitment in the UK and other countries in Northern Europe towards creating a cleaner, more secure and sustainable energy mix;

o shortfall in power generation capacity due principally to the reduction in coal-fired and old nuclear generation facilities;

o EU-wide renewables target requiring 20% of energy to be generated from renewable sources by 2020 as a milestone of a longer-term de-carbonisation agenda, reinforced by further initiatives in connection with the United Nations COP 21 meetings in 2015;

o extensive opportunities for investment in the secondary market for generation assets as utilities and other developers find it necessary to recycle their capital;

and:

The ability to construct a diversified portfolio across established, low-risk technologies, electricity markets, weather systems and revenue types:

o diversification across predominantly operational assets providing a sustainable long-term investment proposition, delivering stable income together with NAV resilience

o investing in established technologies, including wind and solar PV which dominate new power capacity installations in the EU

- proven operational track record including predictable operating costs

- future potential for incremental improvements in design, scale and efficiency

o UK and Northern European focus - markets with a robust long-term energy demand outlook and a well-established political/regulatory commitment to renewables

o variability of weather patterns across Europe adds to diversification provided by exposure to wind and solar energy sources

o contracted revenues with utility counterparties and/or state subsidies provide stability of revenues in early years before giving way to market power price exposure in later years

Investment Policy

In order to achieve its investment objective, the Company invests principally in operational assets which generate electricity from renewable energy sources, with a particular focus on onshore wind farms and solar PV parks.

Investments will be made principally by way of equity and shareholder loans which will generally provide for 100% or majority ownership of the assets by the holding entities. In circumstances where a minority equity interest is held in the relevant portfolio company, the holding entities will secure their respective shareholder rights (including voting rights) through shareholder agreements and other transaction documentation.

The Group aims to achieve diversification principally through investing in a range of portfolio assets across a number of distinct geographies and a mix of renewable energy technologies.

Limits

Investments will be focused in the UK and Northern European countries (including France, Ireland, Germany and Scandinavia) where the Directors, the Investment Manager and the Operations Manager believe there is a stable renewable energy framework. Not more than 50% of the portfolio value (calculated at the time of investment) may be invested in projects that are located in countries outside the UK.

Investments will be made in onshore wind farms and solar PV parks with the amount invested in other forms of energy technologies (such as biomass or offshore wind) limited to 10% of the portfolio value, calculated at the time of investment. (See "Material Amendments" below for a proposed change to this investment limit from 10% to 20%.)

In respect of investments in portfolio companies which have assets under development or construction (including the repowering of existing assets), the cost of works on such assets under development or construction (and not yet operational) to which portfolio companies are exposed may not in aggregate account for more than 15% of overall portfolio value, calculated at the time of investment or commitment.[16] 

The Company will not invest more than 15%, in aggregate, of the value of its total assets in other investment companies or investment trusts that are listed on the Official List maintained by the Financial Conduct Authority.

In order to ensure that the Group has a spread of investment risk, it is the Company's intention that no single asset will account for more than 20% of the portfolio value, calculated at the time of investment.

The Group may enter into borrowing facilities in the short term principally to finance acquisitions. Such short-term financing is limited to 30% of the portfolio value. It is intended that any facility used to finance acquisitions is likely to be repaid, in normal market conditions, within a year through further equity fund raisings.

Wind farms and solar parks, typically with 25 year operating lives, held within portfolio companies generate long-term cash flows that can support longer term project finance debt. Such debt is non-recourse and typically is fully amortising over a 10 to 15 year period. There is an additional gearing limit in respect of such non-recourse debt of 50% of the gross portfolio value (being the total enterprise value of such portfolio companies), measured at the time the debt is drawn down or acquired as part of an investment. The Company may, in order to secure advantageous borrowing terms, secure a project finance facility over a group of portfolio companies.

Revenue

Generally, the Group will manage its revenue streams to moderate its revenue exposure to merchant power prices with appropriate use of power purchase agreements, feed-in-tariffs and green certificates.

Hedging

The Group may enter into hedging transactions in relation to currency, interest rates and power prices for the purposes of efficient portfolio management. The Group will not enter into derivative transactions for speculative purposes.

Cash Balances

Until the Company is fully invested and pending re-investment or distribution of cash receipts, cash received by the Group will be invested in cash, cash equivalents, near cash instruments and money market instruments.

Origination of Further Investments

Each of the investments comprising the portfolio complies with the Company's investment policy and further investments will only be acquired if they comply with the Company's investment policy. It is expected that further investments will include operational onshore wind and solar PV investments that have been originated and developed by Renewable Energy Systems Limited, the Company's Operations Manager. The Company will also review investment opportunities originated by third parties, including from investment funds managed or advised by the Investment Manager or its affiliates.

As a key part of the Company's investment policy is to acquire assets that have been originated by the Company's Operations Manager by exercising the Company's rights under the First Offer Agreement, the Company will not seek the approval of shareholders for acquisitions of assets from the Operations Manager or members of its group in the ordinary course of its investment policy. Pursuant to the First Offer Agreement, the Company has a contractual right of first offer, for so long as the Operations Manager remains the operations manager of the Company in respect of the acquisition of investments in onshore wind and solar PV projects which the Operations Manager wishes to dispose of and which are consistent with the Company's investment policy. It is envisaged that the Operations Manager will periodically make available for sale further interests in projects (although there is no guarantee that this will be the case). Investment approvals in relation to any acquisitions of investments from the Operations Manager will be made by the Investment Manager through the Investment Committee.

Furthermore, any proposed acquisition of assets by the Group from other funds managed by InfraRed (the Investment Manager) that fall within the Company's investment policy will be subject to detailed procedures and arrangements established to manage any potential conflicts of interest that may arise. In particular, any such acquisitions will be subject to approval by the Directors (who are independent of the Investment Manager and the Operations Manager) and will also be subject to an independent private valuation in accordance with valuation parameters agreed between the other InfraRed funds and the Company.

Further investments will be subject to satisfactory due diligence and agreement on price which will be negotiated on an arm's length basis and on normal commercial terms. It is anticipated that any further investments will be acquired out of existing cash resources, borrowings, funds raised from the issue of new capital in the Company or a combination of all three.

Repowering

The Company will have sole discretion to repower projects in its investment portfolio. For these purposes, repowering will include the removal of substantially all of the old electricity generating equipment in relation to a project, and the construction of new electricity generating equipment excluding, for the avoidance of doubt, repair, maintenance and refurbishment of existing equipment. Where the Company determines to repower a project originally acquired from the Operations Manager, the Operations Manager will have the first option to repower such assets in partnership with the Company, whilst the Company will have the right to acquire the newly constructed assets on completion subject to satisfactory due diligence and for a price determined in accordance with a pre-agreed valuation mechanism and on normal commercial terms. Repowering expenditure will be treated as development or construction activity for the purpose of the 15% development and construction limit described above, calculated at the time of investment.

Material Amendments

Material changes to the Company's investment policy may only be made with the approval of the shareholders by way of an ordinary resolution and (for so long as the Ordinary Shares are listed on the Official List) in accordance with the Listing Rules. The investment limits detailed above apply at the time of the acquisition of the relevant investment. The Company is not required to dispose of any investment or to rebalance its investment portfolio as a result of a change in the respective valuations of its assets. Non-material changes to the investment policy must be approved by the Board, taking into account advice from the Investment Manager and the Operations Manager where appropriate.

As noted in the Chairman's Statement, the Board is intending to put to shareholders a proposal at the Annual General Meeting in May 2016 to expand the investment policy of the Company such that up to 20% of its portfolio by value may be invested in investments other than onshore wind and solar PV. This is in order to position the Company to be able to take advantage of opportunities in related sectors which are increasingly being seen by the Investment Manager, including in offshore wind, should the Board, as advised by the Investment Manager with input from the Operations Manager, consider the prospective risk and reward appropriate. Such investments may also include other generating infrastructure or supporting technology, such as back-up power generation, storage or demand-side response.

The proposed amendment will only be put to shareholders after the Company has obtained the Financial Conduct Authority's prior approval of the change in accordance with the Listing Rules. Further details of the background to and reasons for the proposed change will be set out in the notice of the Annual General Meeting to be held on 4 May 2016 which is expected to be dispatched to shareholders in late March 2016.

2.6 Operational and Financial Review

Key Performance Indicators

The Company sets out below its Key Performance Indicators ("KPIs") which it utilises to track its performance over time against its objectives.

1 For 2013, data is derived from the period from IPO on 29 July 2013 to 31 December 2013 unless otherwise stated.

2 NAV per share in 2015 was in particular affected by the removal, in the UK's 2015 Summer Budget, of the benefit to renewables generators of selling Levy Exemption Certificates, effective 1 August 2015.

3 Total Shareholder Return ("TSR") measures the internal rate of return based on the share price at the beginning and end of the financial year together with dividends per share reinvested in the Company. In both 2014 and 2015, TRIG outperformed the FTSE-All Share index which achieved TSRs of 1.2% and 1.0% respectively.

4 There have been acquisitions in the year (with aggregate consideration of £255m) as set out in more detail later in this section.

5 Average Revenue per MWh in 2015 was particularly affected by a range of factors, in particular the reduction in wholesale power prices in the UK, the removal of revenue from the sale of Levy Exemption Certificates from 1 August 2015 in the UK, reduced revenues from the ROC recycle element in 2015 and the inclusion mid-year of revenue contracts from the Fred. Olsen portfolio (which are expected to step-up after a few years), partially offset by an increased contribution from solar projects in the portfolio compared to 2014. The average for 2013 relates to portfolio revenues for the IPO portfolio back-dated to May 2013 (when TRIG was incorporated) in order to provide as long as possible a period for the purposes of comparison.

TRIG Portfolio Update

Portfolio Operating Performance

The Group's portfolio continues to perform closely in line with expectations.

In a year of meteorological conditions (2015 was recognised as the warmest globally on record, surpassing the record set in 2014), the UK and Northern Europe saw further variability in weather patterns in 2015, including unseasonable weather in certain months. In spite of this, TRIG's portfolio performed well, exhibiting the benefits of a diversified portfolio. During the year, the portfolio produced a total of 1,344 gigawatt hours (GWh) of electricity, an increase of 65% over the production of 814GWh in 2014, reflecting the growth in the portfolio's generating capacity as well as an increase in the proportion of generation from onshore wind, which has a significantly higher capacity factor than solar PV.

Overall production was 2.3% ahead of the P50 estimates for energy production assessed by TRIG prior to investment in each project and reflected strong British Isles wind speeds during the year offset by weaker-than-expected UK sunshine and French wind. The following table sets out the energy production performance of TRIG's portfolio by category for the year as a whole against the respective P50 central estimates:

TRIG's Portfolio - Analysis of Production

It should be noted that while solar PV is less productive in terms of its average capacity factor versus onshore wind, it attracts a higher average subsidy and provides higher average revenue per MWh as well as having lower operating costs. Solar projects also tend to trade at lower valuation discount rates than wind. In addition, the majority of the solar PV projects in TRIG's portfolio are unlevered. This resulted in solar representing 27% of the total portfolio value at 31 December 2015 (or 31% following the investment in 15 French solar projects in January 2016).

Winter peaks in production correspond to when the wind is typically strongest. Typically, summer troughs in total expected and actual portfolio production are created because, while solar is at its peak of production, the solar sector's lower capacity factors compared to wind, together with its lower portfolio weighting, result in it not fully offsetting the typically lower wind speeds experienced in the summer compared to the winter. In 2015, several months saw unusually low wind speeds, including in particular September and October (which had better than expected sunshine), while May and December saw exceptionally strong winds compared to seasonal averages. Solar irradiation as a whole for the year in the UK (where the bulk of TRIG's solar projects are located) was slightly below the long-term average, with a strong first half offset by a weaker second half.

The effects on TRIG's results of this variability are substantially reduced by the diversification across TRIG's portfolio, with weak performance in one sector offset by better performance in another sector in any given period of time as a result of geographical differences in weather systems and the different generating technologies (i.e. onshore wind and solar PV) in the portfolio.

Availability for the portfolio as a whole was in line with expectations. A number of turbines required gearbox and generator replacements or other equipment maintenance consistent with expected levels of maintenance and repair requirements for a portfolio of this size. Some older sites had blade replacements performed as part of a remediation programme stemming from a manufacturer defect, which was known about and provided for at the time of investment. Much of the portfolio benefits from manufacturer availability warranties which help protect the owner from any extended downtime. Condition monitoring - vibration data capture and analysis of key components - continued to be utilised across the majority of the portfolio to help minimise downtime as well as the severity and cost of component failures.

Acquisitions

During the year, the Group invested in a further 7 projects (6 onshore wind and 1 solar PV) in the UK, for a total consideration of approximately £255 million, bringing the total portfolio at the year-end to 36 projects and increasing TRIG's total portfolio generating capacity by 219MW to 658MW.

(i) On 20 March 2015, TRIG acquired a 100% interest in an operational solar asset, Four Burrows, for consideration of approximately £8.6 million. The park has 7.2MW of rated generating capacity and is located near Truro, Cornwall in South-West England. The asset was acquired from RES, who developed and built the site, under TRIG's Right of First Offer Agreement. The project uses Renesola PV panels and has been operational since January 2015. It has a 25-year operational life. Operations and maintenance services are provided by RES who took over from Oskomera Solar Power Solutions during the year, with a long-term power purchase agreement in place with an investment grade UK utility. The asset is accredited under the renewables obligation regime at 1.4 ROCs per MWh. The project has no project-level debt.

(ii) On 25 June 2015, TRIG acquired a 49% equity interest in a portfolio holding company, Fred. Olsen Wind Limited, which wholly owns six operating onshore wind farm project companies spread over four different locations in Scotland, together with the provision by the Group of 100% of a mezzanine-level loan (fully amortising by January 2021) which provides TRIG with additional cash flows ranking in priority to cash flows available to shareholders in Fred. Olsen Wind Limited. The acquisition was from the projects' developer, Fred. Olsen Renewables Limited, which continues to own the remaining 51%. The total consideration was approximately £246 million, subject to certain performance-based value adjustments.

The following is a summary of the key data for the six projects (the "Projects") comprising the acquisition from Fred. Olsen Renewables Limited, which have an aggregate generating capacity of 433MW (of which TRIG's 49% equity investment gives it a 212MW "net capacity" share):-

The Projects were purchased with long-term project financing in place totaling approximately £330 million (or approximately 44% of the Projects' enterprise value). Work is underway to replace the power purchase agreement on Crystal Rig 2 prior to its expiry in July 2017.

Operational, maintenance and management services to the Projects are provided by Fred. Olsen Renewables AS and its related company Natural Power Services Limited ("NPSL") on arms-length market terms. RES, TRIG's Operations Manager, represents TRIG on the board of the project companies and provides portfolio-level advice to TRIG in relation to the Projects. As a significant minority equity partner in the Projects, TRIG has shareholder rights appropriate for investments of this nature in addition to board representation.

(ii) Post balance sheet acquisition: Shortly after the 2015 financial year end, TRIG also announced (on 5 January 2016) that it had exchanged contracts to invest €57 million (approx. £44 million at completion) in a portfolio of 15 French solar ground-mounted and rooftop PV projects, alongside Akuo Energy Group, one of France's leading independent renewable energy producers. The transaction was completed on 28 January 2016. The projects have aggregate gross generating capacity of approximately 49MW and net generating capacity (pro rata to TRIG's equity interest) of 21.4MW. Nine of the projects are ground-mounted and six are roof-mounted. The projects are located in mainland France, Corsica and two overseas departments (all operating under French jurisdiction), with revenues wholly derived from French feed-in tariffs without exposure to power price market fluctuations for an average of 16 years from acquisition. The transaction increases TRIG's solar PV projects to approximately 31% of overall portfolio value.

The transaction comprises the purchase of a 49% equity interest in a portfolio holding company together with a mezzanine-level loan. The consideration for the transaction was funded from the Group's acquisition facility with Royal Bank of Scotland and National Australia Bank. RES, TRIG's portfolio Operations Manager, represents TRIG on the supervisory board managing the portfolio. Akuo will continue to provide detailed day-to-day administration as well as operations and maintenance through its directly employed teams across the projects. The projects, commissioned from December 2010 to May 2012, all benefit from power purchase agreements of up to 20 years with EDF, providing fixed, index-linked revenues per MWh, and from broad geographical diversification between mainland France (3 projects, 17.9MW gross capacity), Corsica (4 projects, 14.0MW), La Réunion (6 projects, 12.4MW) and Guadeloupe (2 projects, 4.5MW) hosting 36%, 32%, 25% and 7% of net capacity respectively (pro rata to TRIG's equity interests). The portfolio holding company has controlling equity interests in the underlying projects of between 51% and 100%, investing alongside local parties in 10 of the projects. The projects have been purchased each with long-term amortising project financing in place representing on average approximately 65% of the projects' enterprise value and reflecting the predictability of the revenue streams available under French feed-in tariffs.

As a result of this transaction, the TRIG portfolio's net generating capacity increased to approximately 680MW. The portfolio is now comprised of 51 projects with approximately 69% of the projects by value being onshore wind and 31% being solar PV, with the portion of non-UK projects in the portfolio increasing to approximately 14% by value.

Since IPO, TRIG has acquired projects from eight different vendors (or vendor groups), including from RES under the Right of First Offer Agreement, demonstrating the breadth of opportunities available to the Company.

As TRIG continues to expand its portfolio, the emphasis of the Investment Manager will be on investing in a variety of projects in the UK, France and Ireland, while also considering additional appropriate geographies for investment in Northern Europe (maintaining a minimum investment of 50% of the portfolio by value in the UK, as set out in the Company's investment policy). With the slowdown in potential UK opportunities expected in solar PV, in particular in the medium-term, and with the increased predictability of income flows from other maturing technologies, such as offshore wind, TRIG will review other technologies which may offer further geographical as well as technological diversification.

Financing 

In February 2014, the Group entered into a three year £80 million revolving acquisition facility with Royal Bank of Scotland and National Australia Bank to fund new acquisitions and to provide letters of credit for future investment obligations should they be required. The facility was increased in February 2015 to £120 million and in June 2015 to £150 million, reflecting the growth of the portfolio and the pipeline of acquisitions available.

To enable the £246 million investment alongside Fred. Olsen Renewables made in June 2015, the facility was temporarily increased to £204 million with the additional amount over £150 million being cancelled following repayment shortly after being drawn.

This type of short-term financing is limited to 30% of the portfolio value. It is intended that any facility used to finance acquisitions will be repaid, in normal market conditions, within a year through equity fundraisings.

The acquisition facility was drawn down to fund acquisitions twice in the year. The facility, which was £60.1 million drawn at the start of the year and then further utilised to fund the £8.6 million acquisition of the Four Burrows solar park in March 2015, was fully repaid with the proceeds of the £102.3 million equity fund raise in March 2015. The facility was then drawn to £204 million to fund the Fred. Olsen investment in June 2015 that was also financed by £42 million of cash balances provided by the March and April 2015 equity fund raises (£110 million combined total). The facility balance was fully repaid by the July and November 2015 equity fund raises, which enabled repayments of £125 million and £79 million, respectively. The facility was undrawn at 31 December 2015.

In January 2016, the revolving acquisition facility was £44 million drawn to fund the investment alongside Akuo Energy in France.

During 2015, a total of £310.8 million of new equity capital was raised (net of costs) that alongside the reinvestment of surplus investment income funded the repayments of the revolving acquisition facility of £272.7 million.

In addition to the revolving acquisition facility, the projects may have underlying project level debt. There is an additional gearing limit in respect of such debt, which is non-recourse to TRIG, of 50% of the Gross Portfolio Value (being the total enterprise value of such portfolio companies), measured at the time the debt is drawn down or acquired as part of an investment. The Company may, in order to secure advantageous borrowing terms, secure a project finance facility over a group of portfolio companies. The project-level gearing at 31 December 2015 across the portfolio was 38% (2014: 35%). The increase in gearing has arisen as a result of the investment in Fred. Olsen Wind in June 2015 where the projects came with existing long-term amortising project finance debt in place. Overall gearing may also change as a result of the purchase of further investments with or without project-level debt within them. Long-term non-recourse project-level debt in the portfolio has minimal refinancing risk and has generally been secured during the construction phase of the underlying investments.

The composition of the portfolio is relevant in considering the appropriate level of gearing to deploy within a renewables portfolio. In considering the Company's portfolio alongside others it may be noted that, in the opinion of the Managers:

· Certain of the Company's projects have no or very low power price risk during the subsidy period, when project debt is often in place, because of the design of the subsidy arrangements. These include French feed-in tariff projects, projects with long-term fixed price PPAs and, in due course, UK CfD projects. Of the TRIG portfolio, 19% by value falls into this category (of which 12% are onshore wind projects and 7% are solar PV projects).

· In respect of other operational risks, the Company is invested in renewables technologies which are established and do not, for example, rely on feedstock supplies or process engineering. The portfolio includes solar PV projects which typically enjoy lower variation to their periodic cash flows than wind projects as well as onshore wind which has less operational risk than offshore wind.

As at 31 December 2015, the Group had cash balances of £15.2 million, excluding cash held in investment project companies as working capital or otherwise.

Foreign Exchange Hedging

At the year-end, 8% of the portfolio was located within France and the Republic of Ireland and hence is invested in euro-denominated assets (this proportion reduced during 2015 as a result of significant UK acquisitions made during the year). In January 2016, as a result of the investment in French solar parks alongside Akuo, the non-UK proportion increased from 8% to 14%.

The Group enters into forward hedging contracts against its expected income from the euro-denominated investments' distributions over the short term, currently approximately the next 18 months. In addition the Group enters into further forward hedging contracts such that, when combined with the "income hedges", the overall level of hedge achieved in relation to the euro-denominated assets is approximately 50%.

The Investment Manager keeps under review the level of euros hedged, with the objective of minimising variability in shorter term cash flows with a balance between managing the sterling value of cash flow receipts and mark-to-market cash outflows.

As well as addressing foreign exchange uncertainty on the conversion of the expected euro distributions from investments, the hedge also provides a partial offset to foreign exchange movements in the portion of the portfolio value relating to the euro-denominated assets.

The impact on NAV per share of a 10% movement in the euro exchange rate after the impact of hedges held by the Group outside of the investment portfolio is 0.4p - this is explained in more detail in Section 2.7 (Valuation Sensitivities - euro/sterling exchange rate). This impact increases to around 0.6p following the additional investment in euro-denominated assets in January.

Analysis of Financial Results

Accounting

At 31 December 2015, the Group had investments in 36 projects. As an investment entity for IFRS reporting purposes, the Company carries these investments at fair value.

Basis of preparation

As first adopted in the annual financial statements of the Company for the year ended 31 December 2014, IFRS 10 states that investment entities should measure all of their subsidiaries that are themselves investment entities at fair value following the issuance of 'Investment entities: Applying the Consolidation Exception - Amendments to IFRS 10, IFRS 12 and IAS 28'. Being an investment entity, The Renewables Infrastructure Group (UK) Limited ("TRIG UK"), the Company's single direct subsidiary through which investments are purchased, is measured at fair value as opposed to being consolidated on a line-by-line basis, meaning its cash, debt and working capital balances are included as an aggregate number in the fair value of investments rather than the Group's current assets. In order to provide shareholders with more transparency into the Group's capacity for investment, ability to make distributions, its operating costs and gearing levels, the results have been restated in the below pro forma tables. The pro forma tables show the Group's results for the year ended 31 December 2015 and the comparative period on a non-statutory "Expanded Basis", where TRIG UK is consolidated on a line-by-line basis, compared to the Statutory IFRS financial statements (the "Statutory IFRS Basis").

The Directors consider the non-statutory Expanded Basis to be a more helpful basis for users of the accounts to understand the performance and position of the Company because key balances of the Group including cash and debt balances carried in TRIG UK and expenses incurred in TRIG UK are shown in full rather than being netted off. The necessary adjustments to get from the Statutory IFRS Basis to the non-statutory Expanded Basis are shown below. Commentary is provided below on the primary statements of TRIG on this basis.

Income statement

1. The following were incurred within TRIG UK; acquisition costs, the majority of expenses and acquisition facility fees and interest. The income adjustment offsets these cost adjustments.

2. Calculated based on the weighted average number of shares during the year being approximately 565.2 million shares.

Expanded Basis versus Statutory IFRS Basis

The Statutory IFRS Basis nets off TRIG UK's costs, including overheads, management fees and acquisition costs against income. Above we show the Expanded Basis, which included the expenses incurred within TRIG UK to enable users of the accounts to fully understand the Group's costs. There is no difference in profit before tax or earnings per share between the two bases.

Analysis of Expanded Basis financial results

Profit before tax for the year to 31 December 2015 was £17.0 million, generating earnings per share of 3.0p. These results reflect the adverse impact of the 8 July 2015 UK Summer Budget ("UK Summer Budget"), in which the Chancellor announced the removal of the Climate Change Levy exemption for renewably sourced electricity from August 2015 and a reduction in future corporation tax rates to 19% from April 2017 and to 18% from April 2020, causing a net reduction of £20.2 million to TRIG's portfolio value, translating to a 3.9p loss per share. Before the impact of the UK Summer Budget, profit before tax for the year to 31 December 2015 was £37.2 million, generating earnings per share of 6.6p, which compares to £23.3 million and earnings per share of 6.2p for the prior year to 31 December 2014.

The increases in net operating income (before applying the impact of the Summer Budget) and expenses in the year ended 31 December 2015 as compared to the previous year ended 31 December 2014 reflect the increase in the size of the portfolio.

Acquisition costs, the costs to purchase new investments, represent 0.37% (2014: 0.83%) of the cost of the assets acquired and are set out below.

1. Purchase of new investments balance adjusted to include €57.2 million which relates to the investment in the Akuo French solar projects completed post balance sheet in January 2016 but with the acquisition costs for this investment having been incurred in 2015.

Fund expenses of £7.2 million (2014: £4.8 million), includes all operating expenses and £6.1 million (2014: £3.8 million) fees for the Investment and Operations Managers. Management fees are charged at 1% of Adjusted Portfolio Value as set out in more detail in Note 18 to the financial statements.

Foreign exchange gains on hedges held outside the portfolio of £1.9 million (2014: £1.2 million) partially offset foreign exchange losses incurred on the value of Euro-denominated investments in the portfolio of £3.0 million (2014: £3.2 million) resulting from the weakening of the Euro. Portfolio value movements (included in operating income) are more fully described in Section 2.7 of this Strategic Report. The net foreign exchange loss in the period is hence £1.1 million (2014: £2.0 million).

Finance costs relate to the interest and fees incurred relating to the Group's revolving acquisition facility and the increase in the year compared to the previous year reflects the increase in the facility size to accommodate the investment in Fred. Olsen Wind limited and the higher level of average drawings in the year..

Ongoing charges

1. Total expenses excludes £0.3 million of one-off professional fees incurred during the year.

2. Total expenses excludes £0.2 million of lost bid costs incurred during the year.

The Ongoing Charges Percentage is 1.20% (2014: 1.25%). The ongoing charges have been calculated in accordance with AIC guidance and are defined as annualised ongoing charges (i.e. excluding acquisition costs and other non-recurring items) divided by the average published undiluted net asset value in the period. The Ongoing Charges Percentage has been calculated on the Expanded Basis and therefore takes into consideration the expenses of TRIG UK as well as the Company's. The reduction in OCP reflects portfolio growth during the year as the Group's expenses are spread over a larger capital base. There is no performance fee paid to any service provider.

Balance sheet

Expanded Basis versus Statutory IFRS Basis 

The Statutory IFRS Basis includes TRIG UK's cash, debt and working capital balances as part of portfolio value. There is no change to net assets as a result of the amended standard.

The majority of cash generated from investments had been passed up from TRIG UK to the Company at both 31 December 2015 and 31 December 2014.

At 31 December 2015, TRIG UK had no drawings under its revolving acquisition facility (2014: £60.1 million drawn) meaning the adjustment between the Statutory IFRS Basis and the Expanded Basis is de minimis.

Analysis of Expanded Basis financial results

Portfolio value grew by £239.4 million in the year to £712.3 million, substantially as a result of the two acquisitions in the year as described more fully in Section 2.7 of this Strategic Report. 

Group cash at 31 December 2015 was £15.2 million (2014: £12.9 million) and acquisition facility debt drawn was £Nil (2014: £60.1 million).

Net assets grew by £300.9 million in the year to £726.6 million. The Company raised £311.5 million (after issue expenses) of new equity during the year and produced a £37.2 million profit in the period (before the impact of the Summer Budget), with net assets being stated after accounting for dividends paid in the period (net of scrip take up) of £28.3 million and the £20.2 million impact of the UK Summer Budget. Other movements in net assets totalled £0.7 million, being Managers' shares accruing in H2 2015 and to be issued on or around 31 March 2016.

Net asset value ("NAV") per share as at 31 December 2015 was 99.0p compared to 102.4p at 31 December 2014.

Net asset value ("NAV") and Earnings per share ("EPS") reconciliation

1. Calculated based on the weighted average number of shares during the year being 565.2 million shares

2. Calculated based on the number of shares in issue at 8 July 2015 being 524.7 million shares. If the £20.2 million UK Summer Budget impact had been divided by the weighted average number of shares during the year, 565.2 million shares, the EPS impact is (3.6p), which combined with the pre-UK Summer Budget EPS of 6.6p nets to the 3.0p EPS as reported in the financial statements.

3. Includes shares issued to Managers (less costs) during the year.

4. Scrip dividend take-up comprises 0.9 million shares, equating to £0.9 million, and 3.6 million shares, equating to £3.6 million, issued in lieu of the dividends paid in March 2015 and September 2015, respectively.

Cash flow statement

Expanded Basis versus Statutory IFRS Basis 

The most significant differences in the year between the Statutory IFRS Basis and the Expanded Basis cash flows arise because the Statutory IFRS Basis excludes the revolving credit facility debt repaid by TRIG UK during the year to 31 December 2015 facilitated by inter-company funding from the Company following equity fund-raisings. Other differences include income received by TRIG UK applied to reinvestment and expenses incurred by TRIG UK, including the debt facility arrangement costs and movements in TRIG UK's working capital that are excluded under the Statutory IFRS Basis.

Analysis of Expanded Basis financial results

Cash received from investments in the period was £42.4 million (2014: £35.3 million). The increase in cash received compared with the previous year reflects the increase in the size of the portfolio. Cash flow from operations of £34.0 million (2014: £30.6 million) covers cash dividends paid in the period of £28.3 million (2014: £15.8 million), which excludes £4.5 million (2014: £4.3 million) of scrip dividends, by 1.2 times. The reduced dividend cover reflects in particular the reduction in income during the year due to reduced power prices in the period. The £34.0 million of cash flow from operations was after £16.9 million of scheduled repayments of project-level debt made by the portfolio project companies during the year (which contribute to NAV).

Share issue proceeds (net of costs) totalling £310.8 million (2014: £103.0 million) reflects the net proceeds of the 250 million shares issued during the year under the Share Issuance Programme launched in December 2014 and a further 62.0 million shares by way of tap issue in November 2015.

In the year cash balances increased by £2.3 million and £255.6 million was invested in acquisitions. This was funded through the net addition of £310.8 million of share capital raised and £7.2 million reinvestment of investment income less £60.1 million of acquisition facility debt repaid.

2.7 Valuation of the Group's Portfolio

Introduction

The Investment Manager is responsible for carrying out the fair market valuation of the Group's investments which is presented to the Directors for their approval and adoption. The valuation is carried out on a six monthly basis as at 31 December and 30 June each year.

For non-market traded investments (being all the investments in the current portfolio), the valuation is based on a discounted cash flow methodology, and adjusted in accordance with the European Venture Capital Associations' valuation guidelines where appropriate to comply with IAS 39, given the special nature of infrastructure investments. Where an investment is traded, a market quote is used.

The valuation for each investment reflected in the portfolio valuation is derived from the application of an appropriate discount rate to reflect the perceived risk to the investment's future cash flows to give the present value of those cash flows. The Investment Manager exercises its judgment in assessing both the expected future cash flows from each investment based on the project's life and the financial models produced by each project company and the appropriate discount rate to apply. This is the same method as applied since the inception of the Company.

The Directors' Valuation of the portfolio as at 31 December 2015 was £712.3 million. This valuation compares to £472.9 million as at 31 December 2014 and £699.4 million at 30 June 2015.

Valuation Movements

A breakdown of the movement in the Directors' valuation in the year is set out in the table below.

Allowing for investments of £254.6 million and cash receipts from investments of £42.4 million, the rebased valuation is £685.1 million. The valuation at 31 December 2015 is £712.3 million, representing an increase over the rebased valuation of 4.0% over the year or 4.8% when the timing of acquisitions is taken into account, which would increase to 8.5% if the impact of the UK Summer Budget was excluded.

Each movement between the rebased valuation and the 31 December 2015 valuation is considered in turn below:

(i) Foreign exchange: Weakening of the euro versus sterling has led to a £3.0 million loss on foreign exchange in the period in relation to the euro-denominated investments located in France and the Republic of Ireland, or a £1.1 million loss after the benefit of hedges as stated below. At 31 December 2014, euro-denominated investments comprised 13% and at 31 December 2015 comprised 8% of the portfolio (the reduction being largely due to the impact of acquisitions in the period which were wholly in the UK).The Group enters into forward hedging contracts against its expected income from euro-denominated investments over the short term, currently approximately the next 18 months. In addition the Group enters into further forward hedging contracts such that, when combined with the "income hedges", the overall level of hedge achieved in relation to the euro-denominated assets is approximately 50%.As the euro depreciated the currency hedge generated a £1.9 million gain in the year to 31 December 2015 and serves to reduce the sensitivity to movements in the euro/sterling exchange rate. The negative impact on net assets of the foreign exchange movement is hence £1.1 million after netting off the £1.9 million benefit of the foreign exchange hedge.The Investment Manager keeps under review the level of exposure to the euro and utilises hedges, with the objective of minimising variability in shorter term cash flows with a balance between managing the sterling value of cash flow receipts and potential mark-to-market cash outflows.

(ii) Forecast power prices: Reductions in power price forecasts during the year had the impact of reducing the valuation of the portfolio by a net £26.0 million. The valuation uses updated power price forecasts for each of the markets in which TRIG invests, namely the GB market, the Irish Single Electricity Market, and the French market.As in the later months of 2014, during 2015 power price forecasts have continued to decline. The main drivers reducing the forecast power prices continue to be reduced short-term gas prices (caused in part by a warmer than average winter 2014/2015 and hence lower demand, combined with higher stocks of Liquefied Natural Gas ("LNG") during the period), and lower gas prices being forecast over the longer term.The weighted average power price used to determine the Directors' valuation is comprised of the blend of the forecasts for each of the three power markets in which TRIG is invested after applying expected Power Purchase Agreement power sales discounts. The forecast assumes an increase in power prices in real terms over time.

(iii) Change in Economic assumptions - interest rates: A reduction in interest receivable/payable rates has been applied to cash deposits and project-level debt not subject to fixed rate swaps in the UK projects to reflect lower interest rate projections applicable in the UK - rates now assumed are 1% until March 2019 and a 2.5% rate thereafter (previously 3% was assumed). This change in assumption leads to an increase in the valuation of the UK investments of £0.7 million.

(iv) Change in Economic Assumptions - discount rates: During the year, there has continued to be strong demand for income-producing infrastructure assets, including renewable energy projects, as the market matures and more investors seek to gain exposure. This has resulted in a continued reduction in the prevailing discount rates applied for operating projects which partially offsets the reductions in power price forecasts. Overall the Investment Manager, based on its experience of bidding and transacting in the secondary market for renewable infrastructure assets, has applied an average reduction of 0.3% in discount rates.Without the impact of acquisitions in the period, the portfolio weighted average valuation discount rate would have slightly reduced, however the Company made significant acquisitions in UK wind projects with in-place project finance debt enhancing their returns and with higher than portfolio-average valuation discount rates. The overall impact on the weighted average portfolio valuation discount rate of the market discount rate compression and the acquisitions in the period was to leave it unchanged at 9.0%.There have been no changes made to the discount rate methodology applied to the portfolio valuation. The discount rate used for valuing each investment represents an assessment of the rate of return at which infrastructure investments with similar risk profiles would trade at on the open market.

(v) Portfolio return: This refers to the balance of valuation movements in the period (excluding (i) to (iv) above and represents an uplift of £65.0m. This represents a 9.5% increase on the rebased value of the portfolio. The balance of portfolio return mostly reflects the increase in the net present value of the projected future cash flows brought forward by a year at the prevailing portfolio discount rate (9.0%).

(vi) Impact of UK Summer Budget 2015: The UK Chancellor of the Exchequer announced on 8 July 2015 changes to tax regulations which impacted the value of the portfolio as follows:

· The removal, effective 1 August 2015, of the exemption for renewably sourced electricity from the Climate Change Levy (a tax on some non-domestic supplies of energy to help fund carbon reduction initiatives and provide energy efficiency incentives). Many renewables projects in the UK derived benefit by way of the sale of Levy Exemption Certificates ("LECs") which have been issued to accredited generators of renewable energy. LECs were expected to provide applicable UK projects in the portfolio with incremental annual near-term revenue of approximately £4 per MWh and were expected to represent approximately 4% of the Company's current portfolio revenues, and

· Future reductions in the rate of UK corporation tax from 20% to 19% in 2017 and to 18% in 2020. 

The combined impact on the portfolio valuation of the removal of the projected income from the sale of LECs and the reductions in UK corporation tax is an adverse impact of £20.2 million.

Valuation Sensitivities

The Investment Manager has provided sensitivity analysis to show the impact of changes in key assumptions adopted to arrive at the valuation. For each of the sensitivities, it is assumed that potential changes occur independently of each other with no effect on any other base case assumption, and that the number of investments in the portfolio remains static throughout the model life. All of the NAV per share sensitivities assume 733.6 million Ordinary Shares as at 31 December 2015 (which includes those in issue as well as approximately 0.7 million shares due to be issued in March 2016 as part-payment of the Managers' fees).

The analysis below shows the sensitivity of the portfolio value to changes in key assumptions as follows:

Discount rate assumptions

The weighted average valuation discount rate applied to calculate the portfolio valuation is 9.0% at 31 December 2015. The sensitivity shows the impact on valuation of increasing or decreasing this rate by 0.5%.

Energy yield assumptions

The table below shows the sensitivity of the portfolio value to changes in the energy yield applied to cash flows from project companies in the portfolio. The terms P90, P50 and P10 are explained below.

The base case assumes a "P50" level of output. The P50 output is the estimated annual amount of electricity generation (in MWh) that has a 50% probability of being exceeded - both in any single year and over the long term - and a 50% probability of being under achieved. Hence the P50 is the expected level of generation over the long term.

The sensitivity illustrates the effect of assuming "P90 10-year" (a downside case) and "P10 10-year" (an upside case) energy production scenarios. A P90 10-year downside case assumes the average annual level of electricity generation that has a 90% probability of being exceeded over a 10 year period. A P10 10-year upside case assumes the average annual level of electricity generation that has a 10% probability of being exceeded over a 10 year period. This means that the portfolio aggregate production outcome for any given 10 year period would be expected to fall somewhere between these P90 and P10 levels with an 80% confidence level, with a 10% probability of it falling below that range of outcomes and a 10% probability of it exceeding that range. The sensitivity includes the portfolio effect which reduces the variability because of the diversification of the portfolio. The sensitivity is applied throughout the life of each asset in the portfolio (even though this exceeds 10 years in all cases).

Power price assumptions

The sensitivity considers a flat 10% movement in power prices for all years, i.e. the effect of adjusting the forecast electricity price assumptions in each of the jurisdictions applicable to the portfolio down by 10% and up by 10% from the base case assumptions for each year throughout the operating life of the portfolio.

Inflation assumptions

The projects' income streams are principally a mix of subsidies, which are amended each year with inflation, and power prices, which the sensitivity assumes will move with inflation. The projects' management, maintenance and tax expenses typically move with inflation but debt payments are fixed. This results in the portfolio returns and valuation being positively correlated to inflation.

The portfolio valuation assumes 2.75% p.a. inflation for the UK (based on the Retail Prices Index) and 2.0% p.a. for each of France and Ireland (based on the Consumer Prices Indices).

The sensitivity illustrates the effect of a 0.5% decrease and a 0.5% increase from the assumed annual inflation rates in the financial model for each year throughout the operating life of the portfolio.

Operating costs at project company level

The sensitivity shows the effect of a 10% decrease and a 10% increase to the base case for annual operating costs for the portfolio, in each case assuming that the change to the base case for operating costs occurs with effect from 1 January 2016 and that change to the base case remains reflected consistently thereafter during the life of the projects.

Euro/sterling exchange rates

This sensitivity shows the effect of a 10% decrease and a 10% increase in the value of the euro relative to sterling used for the 31 December 2015 valuation (based on a 31 December 2015 exchange rate of €1.3569 to £1). In each case it is assumed that the change in exchange rate occurs from 1 January 2016 and thereafter remains constant at the new level throughout the life of the projects.

At the year-end, 8% of the portfolio was located in France and Ireland comprising euro-denominated assets. The Group has entered into forward hedging of the expected euro distributions for the next 18 months and in addition placed further hedges to reach a position where approximately 50% of the valuation of euro-denominated assets is hedged. The hedge reduces the sensitivity of the portfolio value to foreign exchange movements and accordingly the impact is shown net of the benefit of the foreign exchange hedge in place.

The euro/sterling exchange rate sensitivity does not attempt to illustrate the indirect influences of currencies on UK power prices which are interrelated with other influences on power prices.

The impact of a 10% move in the euro/sterling exchange rate increases to around 0.6p following the additional investment in euro-denominated assets made by TRIG in January.

Interest rates applying to project company debt and cash balances

This shows the sensitivity of the portfolio valuation to the effects of a reduction of 1% and an increase of 2% in interest rates. The change is assumed with effect from 1 January 2016 and continues unchanged throughout the life of the assets.

The portfolio is relatively insensitive to changes in interest rates. This is an advantage of TRIG's approach of favouring long-term structured project financing (over shorter term corporate debt) which is secured with the substantial majority of this debt having the benefit of long-term interest rate swaps which fix the interest cost to the projects.

It should be noted that all of TRIG's sensitivities above are stated after taking into account the impact of project level gearing on returns.

2.8 Outlook 

Market Conditions and Impact on TRIG's Operating Portfolio

During 2015 and into early 2016, the UK and European renewables markets have continued to be affected by the same trends as in 2014 of lower current and forecast power prices offset by a tightening in market discount rates for operating projects, as a wide range of investors continue to exhibit demand for investment in large-scale renewable energy infrastructure projects. The ongoing weakness in wholesale power prices (to some degree influenced by low oil prices) have fed through to lower wholesale power price forecasts for both the near and long term, which have weighed on the NAV as the portfolio's electricity sales - linked to wholesale power prices - are a significant proportion of long-term portfolio project revenues.

There are many factors at play in wholesale power pricing - both current and forecast. Beyond the near-term concerns such as lower levels of Chinese economic growth, recent warm winters and the potential for increased energy supply from Iran and others, longer term power price-related considerations have a greater impact on TRIG's future cash flows and valuation. These may include matters such as long-term local and global economic growth rates, geopolitical changes, technological changes (for both fossil fuels and renewable energy), deferral or cancellation of harder-to-access fossil resources, changes to the build-out rate of previously-planned fossil fuel or nuclear generation projects, longer term trends in seasonal temperatures, the rate of electrification of transport or heating as well as the deployment of further local and international carbon reduction initiatives (including carbon taxes, demand-response projects and products, as well as public support (where required) for additional generation or distribution projects). While wholesale power prices are notoriously difficult to predict, TRIG may benefit from upside in the investment portfolio if power prices rebound over time - and indeed TRIG's assumption is that power prices will stabilise and recover (from today's relatively low levels) at rates approximately 2% ahead of inflation on average over the long-term.

On government support for renewables, the UN Paris conference in late 2015 provided a boost for global momentum in favour of a continued rollout of decarbonisation initiatives, on an increasingly coordinated and ratcheted basis, including the further build-out of renewables generation capacity and supporting technologies. Further, the year 2015 has recently been confirmed as the warmest globally on record (partly exacerbated by the current "El Nino" effect), eclipsing the record set in 2014 and providing further impetus to overall decarbonisation efforts.

In the UK, TRIG's core market, the recently-reduced levels of support from the current Government for new solar PV and onshore wind developments, while not welcome for developers, appear to be consistent with overall UK 2020 renewables targets (providing that offshore wind in particular fulfils its targets). With the exception of the unexpected removal in 2015 by the UK Treasury of the exemption for renewables generators from the Climate Change Levy, the changes in 2015 have not affected TRIG's operating portfolio or its potential returns. The UK Government continues to promote new developments in offshore wind (relative to onshore wind and solar PV). To support offshore wind in the UK (and possibly other technologies), it is expected that a second round Contracts-for-Difference programme (deferred from the end of 2015) will be launched in the year ahead. This follows the first round which was successfully completed in early 2015 and which achieved a more cost-efficient level of support for those projects that won contracts.

TRIG also continues to monitor changes in other areas that affect the growth and integration of renewables. As renewables are generally intermittent generators, it is essential for grid networks to have sufficient back-up capacity which includes some fossil fuel generation that is supported by the UK Government's Capacity Mechanism. TRIG also assumes a level of discount will continue to be required in power purchase agreements negotiated by renewables generators with electricity suppliers which help to compensate suppliers for the costs of grid balancing. Onshore wind projects in some locations are approaching grid parity (i.e. viability of new developments without subsidy), although achieving that may require further flexibility in national and local government policies to allow new, larger turbines to be installed. As some operating projects begin to reach the end of their subsidy arrangements in the years ahead, repowering with larger, more productive turbines also becomes an opportunity for TRIG, in relation to its existing portfolio as well as new opportunities in its target markets.

Based on the current outlook for the portfolio and TRIG's assessment of the markets in which it operates, TRIG is well-positioned to continue to deliver its target returns, although it should be noted that the long-term delivery of the target IRR will require stabilisation and recovery in power prices from their current depressed levels as discussed above. The Board and the Managers also seek opportunities to improve the performance ahead of target through the delivery of additional operational scale efficiencies and through prudent portfolio and financial management.

The declared interim dividend of 3.11p with respect to the six months to 31 December 2015 is due to be paid on 31 March 2016, producing an aggregate annual dividend for 2015 of 6.19p. As noted in the Chairman's statement, in 2016 TRIG plans to move towards a quarterly dividend (from semi-annual), targeting 1.5625p per share per quarter amounting to an aggregate target dividend of 6.25p per share for the financial year to 31 December 2016. This reflects an inflationary uplift on the aggregate dividend for 2015. The first quarterly dividend is expected to be paid in June 2016 with respect to the three months to 31 March 2016.

TRIG's Investment Pipeline and Acquisition Approach

InfraRed, as the Company's Investment Manager, continues to report strong prospective deal flow following the approximately 50% increase in the portfolio scale by generating capacity in 2015. The UK solar PV pipeline for acquisition after 2016 is expected to reduce following the reductions in support schemes for new developments (after several exceptional years of growth to about 9GW and a high rate of transfer to long-term owners). For the onshore wind sector it is a more positive story. There is about 9GW of current installed onshore wind capacity in the UK, which is expected to increase to around 12GW by 2020. With development and construction cycles being much longer for onshore wind than solar PV and with project sizes generally being much higher (with fewer investors active in this more complex technology), TRIG expects to see a broad range of onshore wind projects and portfolios available for sale in the years ahead as utilities and other developers gradually recycle capital invested in developments which have become operational.

In addition, the UK offshore wind market continues to expand on the back of strong UK Government support, with the current approximately 5GW of installed capacity expected to double by 2020. As highlighted in the Chairman's Statement, the increasing predictability of the offshore wind sector (in both revenues and costs), as the early generations of installed projects establish meaningful track records and the overall industry scale produces increasing efficiencies, results in this sector becoming appropriate for consideration for investment by TRIG. With France and other European markets also driving renewables growth across multiple technologies, TRIG will continue to assess an active pipeline of new investment opportunities beyond the UK.

With long-term secular momentum in the allocation of capital to infrastructure as well as a continuation of the low interest rate era, increasing competition for investment is to be expected for operating projects across renewables in general. This makes the continued careful management of the acquisition pipeline a critical factor. TRIG's access to knowledge on broader energy and infrastructure markets, provided by its Managers, InfraRed and RES, and TRIG's flexibility to invest across different technologies and jurisdictions are both important advantages.

2.9 Ten Largest Investments

Set out below are the ten largest investments in the portfolio. As at 31 December 2015, the largest investment (the Crystal Rig II Wind Farm) accounted for approximately 12% of the portfolio by value. In total, the 10 largest projects accounted for approximately 56% of the project portfolio by value (2014: 65%).

Further information on each of these investments and on other investments in the portfolio are set out in Section 2.3.

2.10 Risks and Risk Management

Risks and Uncertainties

While there are a broad range of risk elements that may potentially impact on TRIG including ones relating to general macro-economic factors, there are three particular categories of variables that may be particularly relevant, given the nature of its business: (1) portfolio energy production; (2) electricity price movements; (3) regulation, including levels of government support schemes for renewables. These risks are long-term in nature, although other near-term risks exist, including those associated for example with the UK's relationship with the European Union. TRIG's approach to risk is one of systematic assessment, on an investment project basis on acquisition, and as part of the overall portfolio management over time as external dynamics shift.

Further comment on these categories is provided below:

Portfolio Electricity Production

The Company has been structured to provide the Investment Manager with the flexibility to invest across a variety of markets and technologies, to enable diversification across weather systems, renewables technologies and regulatory regimes. Onshore wind and solar PV, the main focus, are well understood technologies, deployed extensively both in Europe and world-wide. This operating experience provides a sound basis on which to predict energy yield performance based on average long-term wind speed and solar irradiation data, as well as plant availability and maintenance costs, especially when these technologies are deployed in a large geographically diversified portfolio with an experienced Operations Manager.

Wind power and solar PV, while both termed "intermittent" sources of electricity, compared say to coal or gas whose energy outputs can be planned, in combination provide a smoothing effect, with solar more productive in the summer and wind more productive in the winter and with the absolute level of the two energy sources month by month being uncorrelated. In addition, solar provides greater predictability through the year, compensating for wind which is more variable in the short term. Wind also typically offers a slightly higher return on investment reflecting this variability.

The second element important for maintaining productivity is minimising operating downtime or maximising "availability". RES, as Operations Manager, has over 30 years' track record in both developing and managing renewables and has the experience of global operations, bringing considerable expertise both to the prediction of energy yields prior to acquiring assets, and to operation of assets in order to optimise energy production. This is done through careful planning and execution of project operations and prompt repair works both directly and through subcontractors. As onshore wind and solar PV are now well-proven technologies (with easy access to sites for maintenance compared to offshore wind), typical levels of availability in a given year are around 96% to 98%. Adjustments are made to TRIG's cash flow assumptions prior to the acquisition of an asset - for example a schedule of panel degradation over time for solar PV assets or higher planned maintenance costs for older wind assets.

Electricity Prices

In valuing the TRIG portfolio it is necessary to take a long-term view on electricity prices - particularly wholesale prices - which is done in consultation with independent energy price forecasters. It should be noted that TRIG is more concerned about long-term energy prices, as in the near term its revenues comprise a large proportion of subsidies together with power price agreements ("PPAs") with fixed prices or price floors, as well as some fixed price feed-in tariffs ("FITs").

In 2016, the portfolio expects to benefit from approximately two-thirds of its project-level revenues coming from fixed PPAs, FITs, renewables obligation certificates and other embedded benefits , i.e. revenue sources other than those based on electricity market prices. The Contracts for Difference feed-in tariff regime launched in the UK (with a successful first auction round completed in early 2015 and available for future commissioned assets if further rounds are launched) will likely lead to further security over the revenue stream as more assets are added which benefit from this regime, providing predetermined pricing for 15 years from commissioning.

In general the expectation is that in the long-term European energy wholesale prices will increase in real terms from current levels. While the fall in oil prices has influenced gas prices, it should be noted that oil is not in itself a significant feedstock for electricity production. Other factors have also contributed to lower recent power prices. These include the mild recent winters experienced in the UK and Northern Europe causing a build-up in gas supplies and the absence of major disruptions to European gas supply versus expectations. While further power price falls cannot be excluded, there are upside opportunities should the market experience any reversal of the recent trend.

Higher wholesale power prices may arise from factors such as increases in demand for electrical power from growing economies, increases in carbon taxes following further international cooperation in decarbonisation initiatives, trends towards greater electrical usage in the transportation sector, the ongoing phasing out of heavily polluting coal-fired power stations and the net reduction in nuclear energy generation expected in the EU over the years ahead. With the potential for further progress in storage technologies, intermittent producers of electricity like wind and solar generation plants may become partially or wholly dispatchable, which can increase the average price received for power sales. This can reduce the impact in the Company's valuations of the "cannibalisation effect" (which takes into account the expectation that multiple weather-correlated renewable sources provide the grid with supply simultaneously, thereby reducing spot prices for power).

While greater network interconnections and coordination between EU regions can be expected, further convergence of wholesale or retail prices is expected to be gradual. As TRIG's portfolio is split across several jurisdictions, the Company has the benefit of diversification across electricity markets. The Company further benefits from the experience of the Managers in evaluating different contract types - typically with major utilities - to provide appropriate exposure to, or in some cases protection from, predicted price movements.

Finally, the impact of future power prices can be smoothed out through the portfolio mix and growth strategy. The portfolio valuation is based on wholesale prices in three different European markets with differing future pricing dynamics. With different portfolio projects commissioned at different times in different support jurisdictions and technologies, the portfolio experiences a gradual transition from subsidy-based to power price-based exposure over time. Also, projects are purchased at different points in the power price "cycle", with the most recent power forecasts being incorporated for each acquisition, producing a cost-averaging effect. The Group may be expected to acquire some portfolio projects at times when the long-term power price forecasts utilised turn out to be relatively high, though these would be offset over time by projects purchased when the power forecasts turn out to have been at relatively low levels.

If materially lower long-term energy prices in our investment markets arise, a reduction in the valuation of the existing portfolio would be expected, although new assets may be available more cheaply. Forecasts for future energy prices evolve over time and whilst asset values may not directly follow any such re-forecast from selected third-party providers at any given time, shareholders should expect some variation in asset valuation from period to period, as and when a material movement from prior expectations is identified by the Investment Manager.

Government Support for Renewables

The fundamental challenges for the future of the EU energy market, in which renewables play an increasing part, remain in place. These challenges include the imperative of reducing carbon dioxide and other noxious emissions, the desire to improve energy security and the requirement to replace inefficient or aging energy infrastructure. The gradual emergence of local shale oil and gas opportunities may partially mitigate any reduction in North Sea oil and gas production, but the expectation is that governments will continue to require a significantly increased contribution by renewables technologies to meet the region's needs for energy security and carbon reduction.

Geographically, the Company focuses its investments on the UK and Northern Europe where there is a strong emphasis on delivering versus challenging renewable energy deployment targets for 2020, and showing consistency in grandfathering prior subsidy commitments to operating plants.

The United Nations "COP 21" meetings in Paris in November and December 2015 culminated in agreement by 195 nations on initiatives to support decarbonisation. While this summit fell short of a definitive global agreement on country-specific deliverables, with the level of burden on developed versus developing countries remaining a key point of debate, the outcome is a clear consensus for escalating activity via 5-yearly ratchet mechanisms which look beyond short-term individual country interests. The outcome recognises the importance of practical recognition of the need for continued international monitoring and adjusting of initiatives both at country-level and internationally. In the longer-term, future decarbonisation targets (i.e. beyond the EU's current 2020 targets) - and supporting initiatives - may provide a further boost for renewables investment.

In the UK, the Government views that solar PV and onshore wind technologies have developed to a volume already nearing sector targets for 2020 and that recent roll-out levels risk over-delivery (assuming other technologies also meet their sector targets). Accordingly it has implemented changes to incentives to curtail build-out of these technologies. This is expected to lead to fewer pipeline opportunities for TRIG, most notably in solar, as assets here typically pass from developer to end-investor during or soon after construction, but also over time in onshore wind, until these assets can be delivered without incentives above those of competing fossil-fuel technologies.

The UK Government continues to support the roll-out of offshore wind which remains underweight versus its targets. While lower levels of Government support for further development of onshore wind and solar PV projects may in the medium-term reduce the volume of pipeline opportunities for TRIG to address in these sectors, a moderation in the rate of new development makes those projects that proceed (including further build-out in offshore wind) easier for the electricity system to integrate and absorb. Ultimately this may lower the risk for TRIG's portfolio in the longer term and, additionally, may help support valuations.

France is continuing its policy of reinforcing the build-out of renewables, including solar, onshore and offshore wind. The French Government has stated its objective of reducing its reliance on nuclear energy to 50% of electricity generated by 2025 (from close to three-quarters today), with much of the deficit to be covered by renewable energy. The French market and other North European markets provide considerable opportunity for further diversification of the TRIG portfolio.

Following the 2015 general election in the UK, the new Government unexpectedly removed renewables generators' exemption from the Climate Change Levy with effect from 1 August 2015 (and the associated revenues from the sale of Levy Exemption Certificates ("LECs")). This impacted TRIG's operating portfolio to the extent of reducing medium-term revenues by 4% and NAV by a similar amount. Adjustment for this removal was already fully reflected in the Company's net asset value as set out in the Company's 2015 interim report in August 2015. The Company had engaged in proceedings, along with other participants in the renewables industry, for a judicial review regarding the insufficiency of the notice period given by HM Treasury when removing LECs. On 10 February 2016, the UK High Court of Justice dismissed an application for judicial review to which the Company's proceedings were linked. The Company does not assume any recovery of losses incurred (and fully accounted for in 2015) as a result of removal of LECs.

Other Risk Factors

There are a range of other risks, for example those that are more macroeconomic in nature, including the potential impact of material changes in market discount rates, inflation, interest rates, tax rates or exchange rates. The estimated impact of these on NAV, together with the impact of power price, energy yield and operating cost variability, is illustrated in the sensitivities section of the Company's portfolio valuation in Section 2.7.

Other risk factors which TRIG has been monitoring closely include:

Interest rates: While interest rates remain low in our markets of focus, the recent increase in US interest rates have turned attention to the potential impact of higher rates elsewhere in due course. Current low levels of inflation and modest European GDP growth rates suggest a slow and manageable trajectory of interest rate recovery over time. To the extent that higher rates are correlated with higher inflation, the portfolio is protected by a natural hedge through exposure to inflation-linked contracts and to power prices which can be expected over the long-term to have positive correlation with inflation. In addition, TRIG's project-level debt is generally structured (including with swaps) to fix the levels of interest payments.

UK referendum on EU membership: 2016 promises extensive debate on the UK's membership (or terms of it) of the EU towards a planned referendum. At this stage it is not clear what the precise impact on the UK renewables industry will be of an exit from the EU. Amongst many potential consequences of a UK exit, should this be the outcome, is the possibility of momentum for a second Scottish independence referendum if Scottish politicians succeed in casting a vote for a UK exit from the EU as a trigger for a new Scottish vote. Unchanged however would be the longer-term global imperative towards decarbonisation reflected in the Paris initiatives, the need for fresh generating plant as well as the growing importance of the role of private capital in financing infrastructure as demographics of maturing and aging economies weigh on national budgets. Retrograde actions on established financial commitments inevitably impact on the attractiveness of an economy and government credit-worthiness and threaten access to cheap global capital required to finance deficits.

BEPS: The OECD presented on 5 October 2015 a final package of measures for a reform of the international tax rules regarding the OECD/G20 Base Erosion and Profit Shifting (BEPS) project that was then endorsed by G20 Finance Ministers on 8 October 2015. The UK's HM Treasury issued a consultation document on tax deductibility of corporate interest expense on 22 October 2015 which sought feedback on the potential amendments to UK tax arrangements. The Company, along with others in the infrastructure sector, has taken part in the consultation, and continues to engage with the UK tax authorities as the proposals develop. Having taken advice from the Company's tax advisers, the Investment Manager's initial assessment is that, should the BEPS proposals be incorporated into UK tax law within the range of expected outcomes, the impact, if any, on the Company's net asset value is not expected to be material. It is also not expected that the new rules arising from the BEPS project will be introduced in the UK to take effect before April 2017. However, there can be no certainty that the effect of such rules will be in accordance with the Investment Manager's assessment of the information published to date. As announced by TRIG in October 2015, the Company and its advisers will continue to monitor the potential impact of the BEPS project and will make further announcements, if required, in due course.

In addition, there are other risks also regularly assessed by TRIG - including in the areas of operations, markets, liquidity, credit, counterparties and taxation, and these are set out in the following section on risk management.

Risk Management

Risk Management Framework

The Company has put a risk management framework in place covering all aspects of the Group's business. Given the nature of the Company (being an Investment Company where the Company outsources key services to the Investment Manager, Operations Manager and other service providers), reliance is placed on the Group's service providers' own systems and controls.

The identification, assessment and management of risk are integral elements of the Investment Manager's and the Operations Manager's work in both managing the existing portfolio and in transacting new investment opportunities. The Managers have established internal controls to manage these risks and they review and consider the Group's key risks with the Board on a quarterly basis. If a new risk arises or the likelihood of a risk occurring increases, a mitigation strategy is, where appropriate, developed and implemented together with enhanced monitoring by the Investment Manager and/or Operations Manager.

The Board's Management Engagement Committee also reviews the performance of the Investment Manager and Operations Manager (as well as all key service providers) annually and in particular this review includes a consideration of the Managers' internal controls and their effectiveness and the creation of a risk control matrix.

Given the limited number of expected disposals from the portfolio and the similar risk profile of the investments within the portfolio (i.e. they are all renewable energy infrastructure projects in the UK or Northern Europe with broadly similar contractual structures), the type and nature of the risks in the Group are not expected to change materially from period to period.

The following table summarises some important areas considered on a regular basis in the risk assessment process by risk category as set out in the Alternative Investment Fund Management Directive:-

Counterparty Exposures

Given the importance of state subsidies for investment in renewables, TRIG has exposure to the creditworthiness of and policy commitments by national governments and is reliant on the consistency of government policy, for example "grandfathering" within the UK whereby renewables generators continue to receive the same level of subsidy, set upon commissioning, for the duration of the incentive. In addition, each project company enters into a commercial power purchase agreement ("PPA") with a utility or energy trading company to enable them to sell the electricity generated and to receive the feed-in tariff or Renewables Obligation Certificate ("ROC") subsidy payments. The project companies have entered into PPAs with a range of providers. Each project company enters into a contract for the maintenance of the plant. In the case of wind, this is usually with the turbine manufacturer. For both wind and solar sectors, projects may also benefit from equipment provider warranties.

No supplier or off-taker is currently involved in more than 50% of the projects by value or number (with the exception of RES, TRIG's Operations Manager, which has project asset management and/or maintenance roles in relation to a number of the projects in addition to the portfolio-level services it provides to TRIG). Further acquisitions are likely to provide further diversity of counterparty exposures.

Statement of Directors' Responsibilities

The Directors are responsible for preparing the Directors' Report and the financial statements in accordance with applicable law and regulations. The Companies (Guernsey) Law, 2008, requires the Directors to prepare financial statements for each financial period. Under that law they have elected to prepare the financial statements in accordance with International Financial Reporting Standards (IFRSs) as adopted by the EU and Article 4 of the IAS Regulation and applicable law.

Under company law the directors must not approve the accounts unless they are satisfied that they give a true and fair view of the state of affairs of the company and of the profit or loss of the company for that period. In preparing these financial statements, International Accounting Standard 1 requires that directors:

· properly select and apply accounting policies;

· present information, including accounting policies, in a manner that provides relevant, reliable, comparable and understandable information;

· provide additional disclosures when compliance with the specific requirements in IFRSs are insufficient to enable users to understand the impact of particular transactions, other events and conditions on the entity's financial position and financial performance; and

· make an assessment of the company's ability to continue as a going concern.

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 (Guernsey) Law, 2008. 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.

Under applicable law and regulations, the Directors are also responsible for preparing a Directors' Report and Corporate Governance Statement. The Directors are responsible for the maintenance and integrity of the corporate and financial information included on the Company's website. Legislation in Guernsey and the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.

Directors' responsibility statement

We confirm that to the best of our knowledge:

· the financial statements, prepared in accordance with International Financial Reporting Standards, give a true and fair view of the assets, liabilities, financial position and profit or loss of the Company;

· the Chairman's Statement and Report of the Directors include a fair review of the development and performance of the business and the position of the Company and Group taken as a whole together with a description of the principal risks and uncertainties that it faces; and

· the annual report and financial statements when taken as a whole is fair, balanced and understandable and provides the information necessary for shareholders to assess the Company's performance, business model and strategy.

Disclosure of information to the Auditors

The Directors who held office at the date of approval of this Directors' report confirm that, so far as they are each aware, there is no relevant audit information of which the Company's auditors are unaware and that each Director has taken all the steps that he or she ought to have taken as a Director to make himself or herself aware of any relevant audit information and to establish that the Company's auditors are aware of that information.

AuditorsDeloitte LLP have expressed their willingness to continue in office as auditors and a resolution proposing their re-appointment will be submitted at the Annual General Meeting.

On behalf of the Board of Directors of The Renewables Infrastructure Group Limited

22 February 2016

Registered Office:

1 Le Truchot, St Peter Port, Guernsey, Channel Islands GY1 1WD 

Financial Statements

Income statement

For the year ended 31 December 2015

All results are derived from continuing operations.

There is no other comprehensive income or expense apart from those disclosed above and consequently a statement of comprehensive income hasnot been prepared.

The accompanying Notes are an integral part of these financial statements.

The financial statements were approved and authorised for issue by the Board of Directors on 22 February 2016, and signed on its behalf by:

Director: Director:

Statement of changes in shareholders' equity

For the year ended 31 December 2015

For the year ended 31 December 2014

In line with the Investment Management Agreement and the Operations Management Agreement, 20 per cent. of the management fees are to be settled in Ordinary Shares.

1. The £428,054 transfer between reserves represents the 431,070 shares that relate to management fees earned in the six months to 31 December 2014 and were recognised in other

reserves at 31 December 2014, and were issued to the Managers during the year, with the balance being transferred to share premium reserves, on 31 March 2015.

2. The £480,556 addition to the share premium reserve represents the 483,455 shares that relate to management fees earned in the six months to 30 June 2015 and were issued to the

Managers on 30 September 2015.

3. As at 31 December 2015, 736,190 shares equating to £705,933, based on a Net Asset Value ex dividend of 95.89 pence per share (the Net Asset Value at 31 December 2015 of 99.0 pence

per share less the interim dividend of 3.11 pence per share) were due but had not been issued. The Company intends to issue these shares to the Managers around 31 March 2016.

4. The £232,997 transfer between reserves represents the 235,351 shares that relate to management fees earned in the five months to 31 December 2013 and were recognised in other

reserves at 31 December 2013, and were issued to the Managers during the year, with the balance being transferred to share premium reserves, on 3 March 2014.

5. The £316,971 addition to the share premium reserve represents the 319,206 shares that relate to management fees earned in the six months to 30 June 2014 and were issued to the

Managers on 30 September 2014.

The accompanying Notes are an integral part of these financial statements.

Notes to the financial statements

For the year ended 31 December 2015

1. General information

The Renewables Infrastructure Group Limited ("TRIG" or the "Company") is a closed ended investment company incorporated in Guernsey under Section 20 of the Companies (Guernsey) Law, 2008. The shares are publically traded on the London Stock Exchange under a premium listing. Through its single, direct subsidiary, The Renewables Infrastructure Group (UK) Limited ("TRIG UK"), TRIG invests in operational renewable energy generation projects, predominantly in onshore wind and solar PV segments, across the UK and Northern Europe. The Company, TRIG UK and its portfolio of investments are known as the "Group".

These financial statements are for the year ended 31 December 2015 and comprise only the results of the Company as all of its subsidiaries are measured at fair value following the amendment of IFRS 10 as explained below in Note 2 (a).

2. Key accounting policies

(a) Basis of preparation

The financial statements were approved and authorised for issue by the Board of Directors on 22 February 2016.

The financial statements, which give a true and fair view, have been prepared in compliance with the Companies (Guernsey) Law, 2008 and in accordance with International Financial Reporting Standards ("IFRS") as adopted by the European Union ("EU") using the historical cost basis, except that the financial instruments classified at fair value through profit or loss are stated at their fair values and that the Company has applied the second amendment to IFRS 10, see below, that has not yet been adopted by the EU. All accounting policies have been applied consistently in these financial statements.

The financial statements are presented in sterling, which is the Company's functional currency. Foreign operations are included in accordance with the policies set out in this note.

As first adopted in the annual financial statements of the Company for the year ended 31 December 2014, IFRS 10 states that investment entities should measure all of their subsidiaries that are themselves investment entities at fair value following the issuance of 'Investment entities: Applying the Consolidation Exception - Amendments to IFRS 10, IFRS 12 and IAS 28'. Being an investment entity, TRIG UK is measured at fair value as opposed to being consolidated on a line-by-line basis, meaning its cash, debt and working capital balances are included in the fair value of investments rather than the Group's current assets.

The preparation of financial statements in conformity with IFRS as adopted by the EU requires the Directors to make judgements, estimates and assumptions that affect the application of policies and the reported amounts of assets and liabilities, income and expense. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making the judgements about carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates.

The estimates and underlying assumptions are reviewed on an on-going basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period or in the period of the revision and future periods if the revision affects both current and future periods. Note 3 shows critical accounting judgements, estimates and assumptions.

(b) Going concern

The Group's business activities, together with the factors likely to affect its future development, performance and position are set out in the Strategic Report and also commented on in the Viability Statement contained in the Directors' Report. The financial position of the Group, its cash flows, liquidity position and borrowing facilities are described in the Financial Results. In addition, Notes 1 to 4 of the financial statements include the Group's objectives, policies and processes for managing its capital; its financial risk management objectives; details of its financial instruments and hedging activities; and its exposures to credit risk and liquidity risk.

The Group has a range of long-term contracts with various major UK and European utilities and well-established suppliers across a range of infrastructure projects. In addition, the Company maintains a prudent level of leverage, limited to 30% of portfolio value, and the Group's project-level financing, limited to 50% of Gross Portfolio Value, is non-recourse to the Company. As a consequence, the Directors believe that the Group is well placed to manage its business risks successfully.

The Directors have a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future. Thus they adopt the going concern basis of accounting in preparing the annual financial statements.

New standards early adopted for the current period

The Group has early adopted the following standards:

· Amendments to IFRS 10, IFRS 12 and IAS 28 Investment Entities

· Amendments to IAS 32 Offsetting financial assets and financial liabilities

Standards not yet applied

At the date of authorisation of these financial statements, the following Standards and Interpretations which have not been applied in these financial statements were in issue but not yet effective (and in some cases had not yet been adopted by the EU):

· IFRS 9 Financial Instruments

· IFRS 15 Revenue from Contracts with Customers

· IAS 27 (amendments) Equity Method in Separate Financial Statements

· IFRS 11 (amendments) Accounting for Acquisitions of Interests in Joint Operations

· Annual Improvements to IFRSs: 2012-2014 Cycle - Amendments to: IFRS 5 Non-current Assets Held for Sale and Discontinued Operations, IFRS 7 Financial Instruments: Disclosures, IAS 19 Employee Benefits and IAS 34 Interim Financial Reporting

The Directors do not expect that the adoption of the Standards and Interpretations listed above will have a material impact on the financial statements of the Company in future periods, except IFRS 9 will impact both the measurement and disclosures of financial instruments.

(c) Basis of consolidation

The Company has adopted IFRS 10 'Consolidated Financial Statements', which supersedes IAS 27 'Consolidated and Separate Financial Statements", and as an investment entity is required to measure all of its subsidiaries at fair value. The financial statements therefore comprise the results of the Company only. Subsidiaries are those entities controlled by the Company. The Company has control of an investee, when it is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee as defined in IFRS 10 'Consolidated Financial Statements'.

The Directors believe it is appropriate and relevant to the investor to account for the investment portfolio at fair value, where consolidating it would not be.

The Company's sole, direct subsidiary, TRIG UK, carries out investment activities and incurs overheads and borrowings on behalf of the Group. The Directors therefore provide an alternative presentation of the Company's results in the Strategic Report prepared under the "Expanded basis", which includes the consolidation of TRIG UK.

An entity shall consider all facts and circumstances when assessing whether it is an investment entity, including its purpose and design. Under the definition of an investment entity, as set out in paragraph 27 in the standard, the entity must satisfy all three of the following tests:

I. Obtains funds from one or more investors for the purpose of providing those investors with investment management services; and

II. Commits to its investors that its business purpose is to invest funds solely for returns from capital appreciation, investment income, or both (including having an exit strategy for investments); and

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

The three essential criteria met by the Company are:

I. Typically, an investment entity would have several investors who pool their funds to gain access to investment management services and investment opportunities that they might not have had access to individually. Investing in renewable energy infrastructure, as per the Company's investment policy, would be considered an investment that is not generally available to individual investors due the high capital costs, large barriers to entry and other regulatory issues. The Company, being listed on the London Stock Exchange main market, obtains funds from a diverse group of external shareholders.

II. The Company invests funds solely for returns from capital appreciation and investment income.

III. The Company elects to measure and evaluate the performance of all of its subsidiaries on a fair value basis because using fair value results in more relevant information than, for example, consolidating its subsidiaries or using the equity method for its interests in associates or joint ventures. This is supported by investor presentations, information contained in the initial offer prospectus and the Company fact sheet. Investor focus is on the fair value of the portfolio and investors will continue to challenge and assess discount rates applied to the underlying investment cash flows vis-à-vis revenue and expenses of the project entities. In addition, the Company reports fair value information internally to the entity's key management personnel (as defined in IAS 24), who use fair value as the primary measurement attribute to evaluate the performance of substantially all of its investments and to make investment decisions.

The Directors are of the opinion that the Company has all the typical characteristics of an investment entity and meets the definition in the standard.

(d) Financial instruments

Financial assets and liabilities are recognised on the balance sheet when the Company becomes a party to the contractual provisions of the instrument. Financial assets are derecognised when the contractual rights to the cash flows from the instrument expire or the asset is transferred and the transfer qualifies for derecognition in accordance with IAS 39 'Financial instruments: Recognition and measurement'.

Non-derivative financial instruments

Non-derivative financial instruments comprise investments in equity and debt securities, trade and other receivables, cash and cash equivalents, loans and borrowings, and trade and other payables.

Non-derivative financial instruments are recognised initially at fair value including directly attributable transaction costs. Subsequent to initial recognition, non-derivative financial instruments are measured as described below.

Investments in equity and debt securities

Investments in the equity and loanstock of entities engaged in renewable energy activities are designated at fair value through profit or loss.

The Group manages these investments and makes purchase and sale decisions based on their fair value.

The initial difference between the transaction price and the fair value, derived from using the discounted cash flows methodology at the date of acquisition, is recognised only when observable market data indicates there is a change in a factor that market participants would consider in setting the price of that investment. After initial recognition, investments at fair value through profit or loss are measured at fair value with changes recognised in the income statement.

The Directors consider the equity and loanstock to share the same investment characteristics and risks and they are therefore treated as a single unit of account for valuation purposes and a single class for disclosure purposes.

(e) Impairment

Financial assets

Financial assets, other than those at fair value through profit or loss, are assessed for indicators of impairment at each balance sheet date. A financial asset is considered to be impaired if objective evidence indicates that one or more events have had a negative effect on the estimated future cash flows of that asset. An impairment loss in respect of a financial asset measured at amortised cost is calculated as the difference between its carrying amount, and the present value of the estimated future cash flows discounted at the original effective interest rate. Significant financial assets are tested for impairment on an individual basis. The remaining financial assets are assessed collectively in groups that share similar credit risk characteristics. All impairment losses are recognised in the income statement. An impairment loss is reversed if the reversal can be related objectively to an event occurring after the impairment loss was recognised. For financial assets measured at amortised cost the reversal is recognised in the income statement.

(f) Share capital and share premium

Ordinary Shares are classified as equity. Costs directly attributable to the issue of new shares or associated with the establishment of the Company that would otherwise have been avoided are written-off against the value of the ordinary share premium.

(g) Cash and cash equivalents

Cash and cash equivalents comprises cash balances, deposits held on call with banks and other short-term, highly liquid investments with original maturities of three months or less. Bank overdrafts that are repayable on demand are included as a component of cash and cash equivalents for the purpose of the cash flow statement.

(h) Investment income

Income from investments relates solely to returns from the Company's single, direct subsidiary, TRIG UK. This is recognised when the right to receive interest income is determined on an accruals basis and dividends when these are received.

(i) Income tax

Under the current system of taxation in Guernsey, the Company is exempt from paying taxes on income, profits or capital gains.

(j) Foreign exchange gains and losses

Transactions entered into by the Company in a currency other than its functional currency are recorded at the rates ruling when the transactions occur. Foreign currency monetary assets and liabilities are translated at the rates ruling at the balance sheet date. Exchange differences arising on the retranslation of unsettled monetary assets and liabilities are recognised immediately in the income statement.

(k) Segmental reporting

The Chief Operating Decision Maker (the "CODM") is of the opinion that the Group is engaged in a single segment of business, being investment in renewable infrastructure to generate investment returns while preserving capital. The financial information used by the CODM to allocate resources and manage the Group presents the business as a single segment comprising a homogeneous portfolio.