Greencoat UK Wind Regulatory News (UKW)

Greencoat UK Wind PLC (UKW)

26 February 2018

Greencoat UK Wind PLC reports results for the year ended 31 December 2017

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

2017 Highlights

Performance in line with expectations

High quality acquisitions and oversubscribed equity raising

Dividends and returns

Key Metrics

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

"We are pleased to report another year of solid, consistent performance, demonstrating the strength of our simple and transparent model. We have delivered a total shareholder return of 8.4% and NAV growth (adjusted for dividends) of 2.6p in 2017, and have again increased our target dividend by RPI, to 6.76p per share for 2018.

"Our significant £340m capital raising in October helped to drive our market capitalisation comfortably beyond the £1bn milestone, demonstrating the size and scale we have achieved since we listed in 2013.

"2017 was a busy year on the acquisition front. Whilst maintaining a disciplined approach to acquisitions, we were delighted to acquire interests in 10 new windfarms and increase our investment in the Clyde wind farm, growing our net generating capacity from 420MW to 694MW.

"Looking ahead, wind remains the most mature and widely deployed renewable energy technology in the UK, and the Group is well placed to continue to take advantage of the abundant pool of operating wind assets in the UK. I remain confident that we will continue to meet our objectives of dividend growth in line with RPI and capital preservation in real terms."

Annual report

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

Details of the conference call for analysts and investors:

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

For further information, please contact:

Greencoat UK Wind PLC 020 7832 9400

Stephen LilleyLaurence FumagalliTom Rayner

Headland Consultancy 020 3805 4822

Rob Walker

Charlie Twigg

Defining Characteristics

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

Chairman's Statement

I am pleased to present Greencoat UK Wind PLC's fifth Annual Report since listing in March 2013, for the year ended 31 December 2017.

Performance

During the year, portfolio power generation was in line with budget at 1,457GWh. Wind speed was also in line with the long term mean. The Group's current average generation provides enough electricity to power 620,000 homes.

Net cash generated by the Group and wind farm SPVs was £80.1 million and the dividends paid in the year totalled £52.3 million, thus dividend cover was 1.5x.

Dividends and Returns

Declared dividends for the year total 6.49 pence per share, with the fourth and final quarterly dividend of 1.6225 pence per share paid on 23 February 2018. With our strong cash flow and robust dividend cover, we can confidently target a dividend of 6.76 pence per share with respect to 2018, again increased in line with December's RPI.

NAV per share increased from 107.0 pence (ex dividend) on 31 December 2016 to 109.6 pence (ex dividend) on 31 December 2017, an increase of 2.6 pence (2.4 per cent.) during the year.

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

At the time of the 30 September 2017 NAV, we announced a reduction in the portfolio discount rate of 0.3 per cent., the only such change since listing. This reduction reflects an increase in the market value of UK wind generation assets.

The Total Shareholder Return for the year was 8.4 per cent. and since listing has been 58.3 per cent..

Acquisitions and Equity Issuance

2017 has been a busy year on the acquisition front. We completed the acquisition of interests in 10 new windfarms (9 onshore and 1 offshore) during the year, through 5 transactions, and also increased our investment in the Clyde wind farm. These acquisitions further demonstrated our ability to source and execute transactions across the market - but only when we consider the terms to be advantageous to shareholders. As a result, we invested a total of £507.4 million, with our net generating capacity increasing from 420MW to 694MW.

In order to finance our continuing growth through pursuing further attractive investment opportunities, in September we announced a Share Issuance Programme to issue up to 500 million new shares over a 12 month period. Under this programme, in October we issued 290.6 million new shares at an issue price of 117 pence per share, raising gross issue proceeds of £340 million in an oversubscribed fund raising. Net issue proceeds of £335 million were applied to repay short term borrowings. The issue was NAV accretive (after issue costs) by 1.7 pence per share.

This capital raising caused our market capitalisation comfortably to exceed £1 billion (£1,263 million as at 31 December 2017). With increasing size, our ongoing charges ratio again reduced from 1.33 per cent. in 2016 to 1.24 per cent. in 2017. The expected ratio for 2018 is 1.15 per cent., helped by the second step down in management fees (to 0.8 per cent.) on NAV above £1 billion.

Gearing

The Group will generally avoid using non-recourse debt at wind farm level and aims to keep Group level borrowings at a prudent level (the maximum is 40 per cent. of GAV) to reduce risk, while ensuring that the Group is always fully invested, thus using shareholders´ capital efficiently. During the year the minimum gearing was 11 per cent. of GAV and the maximum was 38 per cent. (average 19 per cent.). We ended the year with external borrowings totalling £265 million and gearing of 19 per cent. of GAV.

Outlook

Wind continues to remain the most mature and widely deployed renewable energy technology available in the UK, and the Company is in a good position to benefit as electricity production from wind becomes an increasingly important part of the UK's generation mix. In 2017, approximately 15 per cent. of the UK's electricity demand was supplied by wind energy.

Although only limited new onshore wind capacity is expected to be installed in the near term, there is a very large existing market of onshore and offshore wind farms that we expect to be available for investment going forwards.

We will continue to maintain a disciplined acquisition strategy: if a potential investment is not in line with the Company's investment objective or is otherwise not in the interests of shareholders then we will not invest. We are already of a sufficient size where shareholders are benefitting from economies of scale, and net cash generation from our current portfolio meets our long term financial objectives.

With our strong cash flow and robust dividend cover, we continue to have confidence in meeting our objectives of dividend growth in line with RPI and capital preservation in real terms.

Governance

The annual internal evaluation of the Board raised no significant issues.

During the year a Management Engagement Committee was set-up as a sub-committee of the Board, with all Directors being appointed to this committee.

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

Annual General Meeting

Our fifth AGM will take place on 30 April 2018 at 2:30 pm at the offices of the Investment Manager. Details of the formal business of the meeting are set out in a separate circular which is sent to shareholders with the Annual Report. We look forward to meeting shareholders on that occasion.

Conclusion

The Company first listed nearly 5 years ago in March 2013. Since listing, we have fully met all of our investment objectives. This is down to the excellent performance of the executive management team in originating and executing investments, raising capital, achieving high levels of performance from the portfolio and maintaining a focused investment strategy, supported by our advisers and other suppliers.

Tim Ingram

Chairman

25 February 2018

Strategic Report

Introduction

The Directors present their Strategic Report for the year ended 31 December 2017. Details of the Directors who held office during the year and as at the date of this report are given in this Annual Report.

Investment Objective

The Company's aim is to provide investors with an annual dividend that increases in line with RPI inflation while preserving the capital value of its investment portfolio in the long term on a real basis through reinvestment of excess cash flow and the prudent use of portfolio gearing. The target return to investors is an IRR net of fees and expenses of 8 per cent. to 9 per cent.. The 2017 dividend of 6.49 pence per annum is targeted to increase in line with December 2017 RPI to 6.76 pence for 2018. Progress on the objectives is measured by reference to the key metrics above.

Investment Policy

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

The Group is structured to be a utility friendly buyer and co-investor in utility owned wind farms. The Group is wholly independent and is not tied to any particular utility or developer.

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

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

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

In contrast to the PFI infrastructure sector (smaller in terms of total equity invested and occupied by larger funds), where links to developers may be beneficial in sourcing new acquisitions, independence is of key importance for the Company to continue to make acquisitions at the best possible price. The Investment Manager's relationships across the sector are also important.

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

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

Structure

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

Discount Control

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

Review of Business and Future Outlook

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

Key Performance Indicators

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

Ongoing Charges

The ongoing charges ratio of the Company is 1.24 per cent. of the weighted average NAV for the year to 31 December 2017. This is made up as follows and has been calculated using the AIC recommended methodology.

Based on the 31 December 2017 NAV of £1,144.0 million, the ongoing total management fee is 1.06 per cent. of NAV. Assuming no change in NAV, the 2018 ongoing charges ratio is expected to be 1.15 per cent..

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

Corporate and Social Responsibility

Environmental, Social and Governance Matters

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

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

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

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

Employees and Officers of the Company

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

Diversity

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

Principal Risks and Uncertainties

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

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

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

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

Risks Affecting the Group

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

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

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

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

Risks Affecting Investee Companies

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

Other things being equal, a decline in the market price of electricity would reduce the portfolio companies' revenues. Approximately 40 per cent. of the Group's revenues are exposed to the floating power price.

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

Wind Resource

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

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

When acquiring wind farms that have only recently entered into operation, only limited operational data is available. In these instances, the acquisition agreements with the vendors of these wind farms may include a ''wind energy true-up'' which will apply once 2 years' operational data has become available. Under this true-up, the net load factor will be reforecast based on all available data and the purchase price will be adjusted, subject to de minimis thresholds and caps.

Wind turbines may have shorter lives than their expected life-span of 25 years. In the event that the wind turbines do not operate for the period of time assumed by the Group in its business model or require higher than expected maintenance expenditure to do so, it could have a material adverse effect on investment returns.

The Group invests in companies that own operating wind farms with an appropriate track record. The Group performs regular reviews and ensures that maintenance is performed on all wind turbines across the wind farm portfolio. Regular maintenance ensures the wind turbines are in good working order, consistent with their expected life-spans.

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

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

Going Concern

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

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

As at 31 December 2017, the Group had net current assets of £3.3 million (2016: £5.3 million) and had cash balances of £5.9 million (2016: £5.9 million) (excluding cash balances within investee companies), which are sufficient to meet current obligations as they fall due. The major cash outflows of the Group are the payment of dividends and costs relating to the acquisition of new assets, both of which are discretionary. The Group had £265 million (2016: £100 million) of outstanding debt as at 31 December 2017. The Group is expected to continue to comply with the covenants of its banking facilities going forward.

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

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

Longer Term Viability

The Company is a member of the AIC and complies with the AIC Code. In accordance with the AIC Code, the Directors are required to assess the prospects of the Group over a period longer than the 12 months associated with going concern. The Directors conducted this review for a period of 10 years, which it deemed appropriate, given the long term nature of the Group's investments which are modelled over 25 years, coupled with its long term strategic planning horizon.

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

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

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

On behalf of the Board

Tim Ingram

Chairman

25 February 2018

Investment Manager's Report

The Investment Manager

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

The team is led by Stephen Lilley and Laurence Fumagalli.

Stephen has 21 years of investment management and financing experience in addition to 6 years in the nuclear industry. Prior to joining the Investment Manager in March 2012, Stephen led the renewable energy infrastructure team at Climate Change Capital (CCC) from May 2010. Prior to CCC, he was a senior director of Infracapital Partners LP, M&G's European Infrastructure fund. During this time, Stephen led over £400 million of investments, including the acquisition of stakes in Kelda Group (Yorkshire Water), Zephyr (wind farms) and Meter Fit (gas/electricity metering). He also sat on the boards of these companies after acquisition. Prior to this, he was a director at Financial Security Assurance, where he led over £2 billion of underwritings in the infrastructure and utility sectors. He also worked for the investment companies of the Serco and Kvaerner Groups.

Laurence also has 21 years of investment management and financing experience. Prior to joining the Investment Manager in March 2012, Laurence held a number of senior roles within CCC from 2006 to 2011. Initially he co-headed CCC's advisory team before transferring in 2007 to the carbon finance team. Laurence joined Stephen in the renewable energy infrastructure team in early 2011. From 2003-2006, Laurence headed the Bank of Tokyo-Mitsubishi's London-based renewables team, where he financed and advised on over 1GW of UK wind. Prior to the Bank of Tokyo-Mitsubishi, Laurence worked in the power project finance team at NatWest.

Investment Portfolio

Portfolio as at 31 December 2017:

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

Portfolio Performance

Portfolio generation for the year was 1,457GWh, in line with budget.

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

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

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

(1) Ownership in Clyde was 28.2 per cent. until dilution and further investment on 4 September 2017.

(2) Includes curtailed generation.

Overall portfolio availability was in line with budget. Notable issues were:

· lower than budgeted availability at Little Cheyne Court due to various gearbox, converter and blade bolt failures;

· lower than budgeted availability at Corriegarth due to various post commissioning issues, which were exacerbated by restricted site access in November and December due to heavy snow – revised access procedures have been put in place;

· lower than budgeted availability at Lindhurst due to the successful proactive replacement of several transformers, various scheduled grid outages and the associated downtime in returning turbines to service following those outages; and

· successful remediation by Siemens of Maerdy yaw gear issues at all but one turbine location with compensation having been agreed for that turbine, which will be curtailed at high wind speeds.

Clyde Extension was commissioned on 28 August 2017, adding 172.8MW of capacity and increasing the total capacity of the Clyde wind farm from 349.6MW to 522.4MW. The contractual arrangements in relation to Clyde Extension are further described under Acquisitions below.

The Stroupster wind energy true-up was settled in the year, with BayWa making a payment of £2.6 million to the Group. The true-up mechanism is designed to mitigate the risk associated with investing in a wind farm before sufficient operational data are available. Wind energy true-ups in respect of Corriegarth and Clyde Extension remain outstanding as disclosed in note 14 to the financial statements.

Health and Safety

There were no major incidents in the year to 31 December 2017. A health and safety audit was conducted across May and June 2017 by an independent consultant. No material areas of concern were identified.

Acquisitions

During the year, the Investment Manager priced 41 wind farms totalling 2,032MW. Of the 41 wind farms priced, 11 investments were made by the Group (including further investment in Clyde), 10 were acquired by other buyers, 3 are no longer being pursued by the Group, and 17 are subject to continuing discussions. In total, secondary market transactions comprising 70 operating UK wind farms were completed in 2017.

2017 was a record year both in terms of market transactions (70) and investments by the Group (11). By being selective, the Group was able to invest over £500 million at market leading returns, and in line with the Company's investment objective.

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

(1) Numbers do not cast owing to a rounding of (£0.2m). 

As mentioned above, Clyde Extension was commissioned on 28 August 2017, adding 172.8MW of capacity and increasing the total capacity of the Clyde wind farm from 349.6MW to 522.4MW. As agreed at acquisition in March 2016, the Clyde Extension construction indemnity provided by SSE fell away upon commissioning and, 5 business days thereafter, the Group's and GLIL's shareholding in Clyde was diluted from 49.9 per cent. (Group 28.2 per cent.) to 30 per cent. (Group 17 per cent.). On the dilution date, the Group and GLIL simultaneously acquired an additional 5 per cent. (Group 2.8 per cent.) of Clyde. This further investment is included in the table above.

As part of their further investment, the Group and GLIL entered into a call option to buy a further 14.9 per cent. (Group 8.4 per cent.) of Clyde for a consideration of £202.2 million (Group £114.2 million). The option is exercisable between 1 April 2018 and 30 June 2018, and is exercisable by the Group and GLIL or by either one of them.

Financial Performance

Power prices in 2017 were in line with budget. The average N2EX Day Ahead auction price was £45.32/MWh (2016: £40.44/MWh).

Portfolio generation and power prices both in line with budget contributed to cash generation in line with budget.

Dividend cover for the year was 1.5x, in line with expectations, as communicated during the year.

The Group's target dividend cover is 1.7x. Excluding the £4.7 million dividend payment made in November 2017 in relation to the 290.6 million shares issued "cum div" in October 2017, the 2017 dividend cover was 1.7x.

Cash balances (Group and wind farm SPVs) increased by £20.1 million from £20.7 million to £41.7 million over the year.

(1) Excludes acquired cash, includes cash received under wind energy true-ups.

The following two tables provide further detail in relation to net cash generation of £80.1 million:

(1) Consolidated Statement of Cash Flows

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

(3) Note 13 to the Financial Statements

Investment Performance

The NAV at 31 December 2017 was £1,144.0 million (111.2 pence per share):

· NAV at 31 December 2016 was £800.1 million (108.6 pence per share);

· £507.4m of investments were made in the year as further described under Acquisitions above;

· the portfolio DCF valuation decreased by £17.4 million or approximately 2 per cent. (representing "depreciation" in line with expectations);

· cash balances increased by £21.0 million as noted above;

· net liabilities at Group level increased by £2.1 million; and

· Aggregate Group Debt increased by £165 million, comprising £500 million drawn down for acquisitions and £335 million repaid from net issue proceeds in October 2017.

Total dividends of £52.3 million were paid in 2017. Total dividends of £57.3 million have been paid with respect to 2017 (6.49 pence per share). The target dividend with respect to 2018 is 6.76 pence per share (increased in line with December 2017 RPI).

The share price as at 31 December 2017 was 122.8 pence, representing a 10.4 per cent. premium to NAV. TSR for 2017 was 8.4 per cent. (58.3 per cent. since listing).

Reconciliation of Statutory Net Assets to Reported NAV

NAV Sensitivities

NAV is equal to GAV less Aggregate Group Debt.

GAV is the sum of:

· DCF valuations of the Group's investments;

· cash (at Group and wind farm SPV level); and

· other relevant assets and liabilities of the Group.

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

At the time of the 30 September 2017 NAV, the Group announced a reduction in the portfolio discount rate of 0.3 per cent., the only such change since listing. This reduction compares to a reduction in long term gilt yields over the same period of approximately 1 per cent.. The base case portfolio discount rate is now 7.7 per cent.. This is an unlevered discount rate. The equivalent levered discount rate is approximately 10 per cent.. A variance of +/- 0.5 per cent. is considered to be a reasonable range of alternative assumptions for discount rate.

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

Long term power price forecasts are provided by a leading market consultant, updated quarterly and may be adjusted by the Investment Manager where more conservative assumptions are considered appropriate. Base case real power prices increase from approximately £45/MWh (2018) to approximately £55/MWh (2043). The sensitivity below assumes a 10 per cent. increase or decrease in power prices relative to the base case for every year of the asset life, which is relatively extreme (a 10 per cent. variation in short term power prices, as reflected by the forward curve, would have a much lesser effect).

The base case long term RPI assumption is 2.75 per cent. (0.75 per cent. above the long term 2.0 per cent. CPI target).

Gearing

As at 31 December 2017, the Group had £265 million of debt outstanding, equating to 19 per cent. of GAV.

Debt outstanding comprised a single term debt facility of £100 million (together with associated interest rate swaps) and £165 million drawn on the Group's revolving credit facility.

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

Outlook

The regulatory outlook for operational wind farms in the UK remains stable owing to the UK Government's policy of "grandfathering" for operational projects. The Group invests in operational wind farms, backed by known and fixed support mechanisms.

There is currently 12GW of operational onshore wind capacity plus 6GW offshore. Installed capacity is set to grow to 13GW onshore plus 12GW offshore by 2020, as assets currently in construction come into operation. In monetary terms, the secondary market for operational UK wind farms is approximately £45 billion, increasing to £70 billion by 2020. The Group currently has a market share of approximately 3 per cent..

As an owner of operational wind farms, the key risk faced by the Group is power price. Power prices in 2017 were in line with budget. In general, independent forecasters expect UK wholesale power prices to rise in real terms from current levels, driven by higher gas and carbon prices. The long term power price forecast is updated each quarter and reflected in the reported NAV.

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

In general, the outlook for the Group is very encouraging, with proven operational and financial performance from the existing portfolio combined with a healthy pipeline of attractive further investment opportunities. 2017 was a record year both in terms of market transactions (70) and investments by the Group (11). By continuing to be selective, we look forward to further acquisitions in line with the Company's investment objective.

Board of Directors

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

Tim Ingram, Chairman (appointed 4 December 2012)

Tim Ingram (Chairman), aged 70, is an experienced chairman and chief executive, with a long executive career in financial services and a non-executive portfolio spanning a variety of sectors, including business management software and services, real estate, manufacturing, investment trusts, insurance and commercial and investment banking.

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

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

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

Shonaid Jemmett-Page, FCA, aged 57, is an experienced non-executive director in the energy and financial sectors. Shonaid spent the first 20 years of her career at KPMG in London and Tokyo, rising to the position of Partner, Financial Services. In 2001, she moved to Unilever, where she was Senior Vice President, Finance and Information for Asia, based in Singapore, before returning to the UK as Finance Director for Unilever's global non-food business. In 2009, Shonaid joined CDC Group as Chief Operating Officer, a position she held until 2012.

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

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

William Rickett C.B., aged 65, is a former Director General of the Department of Energy & Climate Change within the UK Government (2006-2009) with considerable experience as non-executive director of private sector companies. William is Chairman of Cambridge Economic Policy Associates Ltd, an economic, financial and public policy consultancy with a strong energy practice and was Chairman of the governing board of the International Energy Agency from 2007 to 2009. He is currently a non-executive Director of Impax Environmental Markets plc, a listed investment trust specialising in the alternative energy, waste and water sectors and Smart DCC Ltd, the company procuring the shared infrastructure needed for the roll out of smart gas and electricity meters across the country. William was previously a non-executive Director of Eggborough Power Ltd, an electricity generating company, Helius Energy plc, an AIM listed developer of new dedicated biomass power stations, and the National Renewable Energy Centre Limited, which helps to develop renewable energy technologies.

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

Dan Badger (appointed 1 July 2013)

Dan Badger, aged 71, has had a long career in the energy sector and has significant experience in wind farm transactions. He is currently a consultant to Hideal Partners, a renewables advisory firm, and was previously a member of the UK/European renewables M&A team at Babcock & Brown.

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

Martin McAdam (appointed 1 March 2015)

Martin McAdam, aged 56, is an accomplished executive with significant experience in the energy and renewables sector. He was formerly Chief Executive Officer of Aquamarine Power. Prior to that, Martin was President and Chief Executive Officer of the US subsidiary of Airtricity, a role in which he constructed over 400MW of wind farm capacity.

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

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

Other UK Public Company Directorships

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

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

Conflicts of Interest

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

Report of the Directors

The Directors present their Annual Report, together with the consolidated financial statements of Greencoat UK Wind PLC for the year to 31 December 2017. The Corporate Governance Report forms part of this report.

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

Capital Structure

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

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

Authority to Purchase Own Shares

The current authority of the Company to make market purchases of up to 14.99 per cent. of its issued share capital expires at the conclusion of the 2018 AGM. Special resolution 13 will be proposed at the forthcoming AGM seeking renewal of such authority until the next AGM (or 30 June 2019, whichever is earlier). The price paid for the shares will not be less than the nominal value or more than the maximum amount permitted to be paid in accordance with the rules of the UK Listing Authority in force at the date of purchase. This power will be exercised only if, in the opinion of the Directors, a repurchase would be in the best interests of shareholders as a whole. Any shares repurchased under this authority will either be cancelled or held in treasury at the discretion of the Board for future resale in appropriate market conditions.

The Directors believe that the renewal of the Company's authority to purchase shares, as detailed above, is in the best interests of shareholders as a whole and therefore recommend shareholders to vote in favour of special resolution 13.

The Directors also recommend shareholders to vote in favour of resolutions 11 and 12, which renew their authority to allot equity securities for the purpose of satisfying the Company's obligations to pay the equity element of the Investment Manager's fee, and also their authority to allot equity securities for cash either pursuant to the authority conferred by resolution 11 or by way of a sale of treasury shares.

Major Interests in Shares

Significant shareholdings as at 15 February 2018 are detailed below.

Significant shareholdings as at 31 December 2017 are detailed below.

Companies Act 2006 Disclosures

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

Investment Trust Status

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

Diversity and Business Review

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

Directors' Indemnity

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

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

Global Greenhouse Gas Emissions

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

In relation to the Group's investee companies, the level of greenhouse gas emissions arising from the low volume of electricity imports and from operation and maintenance activity is not considered material for disclosure purposes. Further, as the assets are renewable energy generators, they reduce carbon dioxide emissions on a net basis (at a rate of approximately 0.4t CO2 per MWh).

Risks and Risk Management

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

Independent Auditor

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

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

Annual Accounts

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

The Board recommends that the Annual Report, the Report of the Directors and the Independent Auditor's Report for the year ended 31 December 2017 are received and adopted by the shareholders and a resolution concerning this will be proposed at the AGM.

Dividend

The Board recommended an interim dividend of £16,693,745, equivalent to 1.6225 pence per share with respect to the 3 month period ended 31 December 2017, bringing total dividends with respect to the year to £57,312,248, equivalent to 6.49 pence per share as disclosed in note 8 to the financial statements.

Subsequent Events

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

Strategic Report

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

On behalf of the Board

Tim Ingram

Chairman

25 February 2018

Directors' Remuneration Report

This report has been prepared by the Directors in accordance with the requirements of the Companies Act 2006 and the Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008. A resolution to approve the Directors' Remuneration Report will be proposed at the AGM. At the AGM on 26 April 2017, shareholders voted 96.86 per cent. in favour to approve the Directors' Remuneration Report for the year ended 31 December 2016.

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

Annual Statement from the Chairman of the Board

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

Remuneration Policy

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

Each Director receives a fixed fee per annum based on their roles and responsibility within the Company and the time commitment required. It is not considered appropriate that Directors' remuneration should be performance related and none of the Directors are eligible for pension benefits, share options, long term incentive schemes or other benefits in respect of their services as non-executive Directors of the Company. The total remuneration of non-executive Directors has not exceeded the £300,000 per annum limit set out in the Articles of Association of the Company.

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

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

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

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

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

The Company's remuneration policy has applied from incorporation on 4 December 2012, and the Directors do not envisage any changes to the remuneration policy in the next accounting period. A resolution to approve the remuneration policy will be proposed at the AGM and the Directors recommend that this policy is approved by the shareholders.

Annual Report on Remuneration

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

None of the Directors received any other remuneration or additional discretionary payments during the year from the Company (2016: £nil).

An external review of Directors' remuneration has been undertaken by Viti Solutions. In light of this, it has been decided to increase the basic fee of non-executive Directors by £2,000 per annum from £35,000 to £37,000 per annum. No change is planned to the Chairman's fee. As a result, the total fees paid to Directors for 2018 are expected to increase by £8,000 (3.5 per cent.) to £233,000.

Relative Importance of Spend on Pay

The remuneration of the Directors with respect to the year totalled £225,000 (2016: £225,000) in comparison to dividends paid to shareholders with respect to the year of £57,312,248 (2016: £38,835,224).

Company Performance

Due to the positioning of the Company in the market as a sector-focused infrastructure fund investing in operating UK wind farms to produce stable and inflating dividends for investors while aiming to preserve capital value, the Directors consider that a listed infrastructure fund has characteristics of both an equity index and a bond index. As the Company listed on 27 March 2013, historical data for the past 9 years is not yet available.

Directors' Interests (audited information)

Directors who held office during the year and had interests in the shares of the Company as at 31 December 2017 are given in the table below. There were no changes to the interests of each Director as at the date of this report.

1 includes 42,702 ordinary shares legally and beneficially owned by his spouse and 177,827 ordinary shares which are held in trust arrangements with Lloyd's of London in respect of security for certain underwriting activities.

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

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

4 includes 11,690 ordinary shares legally and beneficially owned by his spouse.

On behalf of the Board

Tim Ingram

Chairman

25 February 2018

Statement of Directors' Responsibilities

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

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

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

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

Website Publication

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

Directors' Responsibilities Pursuant to DTR4

The Directors confirm to the best of their knowledge that:

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

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

On behalf of the Board

Tim Ingram

Chairman

25 February 2018

Corporate Governance Report

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

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

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

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

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

The Board

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

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

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

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

Diversity Policy

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

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

The Investment Manager operates an equal opportunities policy and its partners and employees comprise 18 men and 10 women.

Performance and Evaluation

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

Since then, an internal evaluation of the Board, the Audit Committee and individual Directors has been conducted in the form of performance appraisal, questionnaires and discussion to determine effectiveness and performance in various areas, as well as the Directors' continued independence and tenure. This process was facilitated by the Company Secretary. The review concluded that the overall performance of the Board and Audit Committee was satisfactory and the Board was confident in its ability to continue to govern the Company.

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

Board Responsibilities

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

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

Committees of the Board

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

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

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

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

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

The Investment Manager

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

The Investment Manager's appointment is terminable by the Investment Manager or the Company on not less than 12 months' notice, such notice not to expire earlier than 30 June 2019. The Investment Management Agreement may be terminated with immediate effect and without compensation, by either the Investment Manager or the Company if the other party has gone into liquidation, administration or receivership or has committed a material breach of the Investment Management Agreement.

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

Board Meetings, Committee Meetings and Directors' Attendance

The number of meetings of the full Board attended in the year to 31 December 2017 by each Director is set out below:

During the year, there were also 10 meetings of sub-committees of the Board.

The number of meetings of the Audit Committee attended in the year to 31 December 2017 by each Audit Committee member is set out below:

Internal Control

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

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

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

· internal reviews of all financial reports;

· review by the Board of financial information prior to its publication;

· authorisation limits over expenditure incurred by the Group;

· review of valuations; and

· authorisation of investments.

Whistleblowing

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

Amendment of Articles of Association

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

Relations with Shareholders

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

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

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

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

On behalf of the Board

Tim Ingram

Chairman of the Board

25 February 2018

Audit Committee Report

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

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

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

Summary of the Role and Responsibilities of the Audit Committee

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

The Audit Committee is the forum through which the external Auditor reports to the Board and is responsible for reviewing the terms of appointment of the Auditor, together with their remuneration. On an ongoing basis, the Audit Committee is responsible for reviewing the objectivity of the Auditor along with the effectiveness of the audit and the terms under which the Auditor is engaged to perform non-audit services. The Audit Committee is also responsible for reviewing the Company's corporate governance framework, system of internal controls and risk management, ensuring they are suitable for an investment company.

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

Overview

During the year, the Audit Committee's discussions have been broad ranging. In addition to the 6 formally convened Audit Committee meetings from 1 January 2017 to the date of this report, the Audit Committee has had regular contact and meetings with the Investment Manager, the Administrator and the Auditor. These meetings and discussions focused on, but were not limited to:

Financial Reporting

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

BDO LLP attended 3 of the 6 formal Audit Committee meetings held during the period from 1 January 2017 to the date of this report. The Audit Committee has also held private meetings with the Auditor to provide additional opportunities for open dialogue and feedback. Matters typically discussed include the Auditor's assessment of the transparency and openness of interactions with the Investment Manager and the Administrator, confirmation that there has been no restriction in scope placed on them, the independence of their audit and how they have exercised professional scepticism.

Significant Issues

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

In respect of the year ended 31 December 2016 the audit of the Company was subject to review by the FRC's Audit Quality Review team as part of its routine programme of audit firm quality inspections. The Audit Committee considered the review team's findings noting that there were no significant issues reported. The Audit Committee discussed the review with the audit engagement partner on 19 October 2017.

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

On a quarterly basis, the Investment Manager provides a detailed analysis of the NAV highlighting any movements and assumption changes from the previous quarter's NAV. This analysis and the rationale for any changes made is considered and challenged by the Chairman of the Audit Committee and subsequently approved by the Board. The Audit Committee has satisfied itself that the key estimates and assumptions used in the valuation model are appropriate and that the investments have been fairly valued. The key estimates and assumptions include the useful life of the assets, the discount factors, the level of wind resource, the rate of inflation, the price at which the power and associated benefits can be sold and the amount of electricity the assets are expected to produce.

Internal Control

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

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

The Audit Committee formally reviewed the updated risk matrix in Q1 2018 and will continue to do so at least annually. By their nature, these procedures provide a reasonable, but not absolute, assurance against material misstatement or loss. Regular reports will be provided to the Audit Committee highlighting material changes to risk ratings.

The Audit Committee reviewed the Group's principal risks and uncertainties as at 30 June 2017, to determine that these were unchanged from those disclosed in the Company's 2016 Annual Report and remained the most likely to affect the Group in the second half of the year.

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

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

Internal Audit

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

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

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

External Auditor

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

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

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

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

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

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

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

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

Annual General Meeting

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

Shonaid Jemmett-Page

Chairman of the Audit Committee

25 February 2018

Independent Auditor's Report

To the Members of Greencoat UK Wind PLC

Opinion

We have audited the financial statements of Greencoat UK Wind Plc (the 'parent company') and its subsidiaries (the 'Group') for the year ended 31 December 2017 which comprise the Consolidated Statement of Comprehensive Income, the consolidated and parent company Statement of Financial Position, the consolidated and parent company Statement of Changes in Equity, the consolidated and parent company Statement of Cash Flows and notes to the financial statements, including a summary of significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and International Financial Reporting Standards (IFRSs) as adopted by the European Union and, as regards the parent company financial statements, as applied in accordance with the provisions of the Companies Act 2006.

In our opinion the financial statements:

Basis for Opinion

We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor's responsibilities for the audit of the financial statements section of our report. We are independent of the Group in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC's Ethical Standard as applied to listed public interest entities, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Conclusions Relating to Principal Risks, Going Concern and Viability Statement

We have nothing to report in respect of the following information in the Annual Report, in relation to which the ISAs (UK) require us to report to you whether we have anything material to add or draw attention to:

Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements of the current period and include the most significant assessed risks of material misstatement (whether or not due to fraud) that we identified. These matters included those which had the greatest effect on: the overall audit strategy; the allocation of resources in the audit; and directing the efforts of the engagement team. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

The valuation of investments in the underlying wind farm portfolio was the risk that had the greatest impact on our audit strategy and scope, including the allocation of resources in the audit.

Our Application of Materiality

We apply the concept of materiality both in planning and performing our audit, and in evaluating the effect of misstatements. For planning, we consider materiality to be the magnitude by which misstatements, including omissions, could influence the economic decisions of reasonable users that are taken on the basis of the financial statements. Importantly, misstatements below this level will not necessarily be evaluated as immaterial as we also take account of the nature of identified misstatements, and the particular circumstances of their occurrence, when evaluating their effect on the financial statements as a whole.

The application of these key considerations gives rise to 2 levels of materiality for the Group, the quantum and purpose of which are tabulated below.

It is appropriate to set financial statement materiality for the parent company and the other component at a lower level than Group materiality. In light of the nature of the transactions and balances within each company, we have set materiality at 95% of Group materiality.

We agreed with the Audit Committee that we would report to the Audit Committee all audit differences in excess of £242,000, as well as differences below that threshold that, in our view, warranted reporting on qualitative grounds.

An Overview of the Scope of Our Audit

A description of the scope of an audit of financial statements is provided on the FRC's website at www.frc.org.uk/auditscopeukprivate

Our audit approach was developed by obtaining an understanding of the Group's activities, the key functions undertaken on behalf of the Board by the Investment Manager and Administrator and the overall control environment. Based on this understanding we assessed those aspects of the Group's financial statements which were most likely to give rise to a material misstatement. The Group audit engagement team was responsible for the audit of all entities included in the consolidated financial statements.

Other Information

The other information comprises the information included in the Annual Report other than the financial statements and our auditor's report thereon. Other information also excludes the report relating to matters under the Alternative Investment Fund Managers Directive. The Directors are responsible for the other information. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon. In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether there is a material misstatement in the financial statements or a material misstatement of the other information. If, based on the work we have performed, we conclude that there is a material misstatement of the other information, we are required to report that fact.

We have nothing to report in this regard.

In this context, we also have nothing to report in regard to our responsibility to specifically address the following items in the other information and to report as uncorrected material misstatements of the other information where we conclude that those items meet the following conditions:

· Fair, balanced and understandable - the statement given by the Directors that they consider the Annual Report and financial statements taken as a whole is fair, balanced and understandable and provides the information necessary for shareholders to assess the Group's performance, business model and strategy, is materially inconsistent with our knowledge obtained in the audit; or

· Directors' statement of compliance with the UK Corporate Governance Code  - the parts of the Directors' statement required under the Listing Rules relating to the Company's compliance with the UK Corporate Governance Code containing provisions specified for review by the Auditor in accordance with Listing Rule 9.8.10R(2) do not properly disclose a departure from a relevant provision of the UK Corporate Governance Code.

Opinions on Other Matters Prescribed by the Companies Act 2006

In our opinion, the part of the Directors' Remuneration Report to be audited has been properly prepared in accordance with the Companies Act 2006.

In our opinion, based on the work undertaken in the course of the audit:

Matters on Which we are Required to Report by Exception

In the light of the knowledge and understanding of the Group and the parent company and its environment obtained in the course of the audit, we have not identified material misstatements in:

We have nothing to report in respect of the following matters in relation to which the

Companies Act 2006 requires us to report to you if, in our opinion:

Responsibilities of Directors

As explained more fully in the Statement of Directors' Responsibilities, the Directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the Directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, the Directors are responsible for assessing the Group's and the parent company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the Directors either intend to liquidate the Group or the parent company or to cease operations, or have no realistic alternative but to do so.

Auditor's Responsibilities for the Audit of the Financial Statements

This report is made solely to the Company's members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the Company's members those matters we are required to state to them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company and the Company's members as a body, for our audit work, for this report, or for the opinions we have formed.

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council's website at: www.frc.org.uk/auditorsresponsibilities.  This description forms part of our Auditor's report.

Other Matters Which we are Required to Address

Following the recommendation of the Audit Committee, we were appointed by the Audit Committee on 4 December 2017 to audit the financial statements for the year ending 31 December 2017 and subsequent financial periods. The period of total uninterrupted engagement is 5 years, covering the years ending 31 December 2013 to 31 December 2017.

The non-audit services prohibited by the FRC's Ethical Standard were not provided to the Group or the parent company and we remain independent of the Group and the parent company in conducting our audit.

Our audit opinion is consistent with the additional report to the Audit Committee.

Leigh Treacy (Senior Statutory Auditor)

For and on behalf of BDO LLP, Statutory Auditor

London

United Kingdom

25 February 2018

BDO LLP is a limited liability partnership registered in England and Wales (with registered number OC305127).

Consolidated Statement of Comprehensive Income

For the year ended 31 December 2017

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

Consolidated Statement of Financial Position

As at 31 December 2017

Authorised for issue by the Board on 25 February 2018 and signed on its behalf by:

Tim Ingram Shonaid Jemmett-Page

Chairman Director

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

Statement of Financial Position - Company

As at 31 December 2017

The Company has taken advantage of the exemption under section 408 of the Companies Act 2006 and accordingly has not presented a Statement of Comprehensive Income for the Company alone. The profit after tax of the Company alone for the year was £59,868,000 (2016: £61,358,000).

Authorised for issue by the Board on 25 February 2018 and signed on its behalf by:

Tim Ingram Shonaid Jemmett-Page

Chairman Director

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

Consolidated and Company Statement of Changes in Equity

For the year ended 31 December 2017

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

After taking account of cumulative unrealised gains of £47,010,325, the total reserves distributable by way of a dividend as at 31 December 2017 were £258,218,229.

After taking account of cumulative unrealised gains of £35,194,977, the total reserves distributable by way of a dividend as at 31 December 2016 were £262,466,218.

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

Consolidated Statement of Cash Flows

For the year ended 31 December 2017

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

Statement of Cash Flows - Company

For the year ended 31 December 2017

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

Notes to the Consolidated Financial Statements

For the year ended 31 December 2017

1. Significant accounting policies

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

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

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

The Directors have concluded that the Group has all the elements of control as prescribed by IFRS 10 "Consolidated Financial Statements" in relation to all its subsidiaries and that the Company continues to satisfy the criteria to be regarded as an investment entity as defined in IFRS 10, IFRS 12 "Disclosure of Interests in Other Entities" and IAS 27 "Consolidated and Separate Financial Statements". Subsidiaries are therefore measured at fair value through profit or loss, in accordance with IFRS 13 "Fair Value Measurement" and IAS 39 "Financial Instruments: Recognition and Measurement". The financial support provided by the Company to its unconsolidated subsidiaries is disclosed in note 10.

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

In the parent company financial statements, investments in subsidiaries are measured at fair value through profit or loss in accordance with IAS 39, as permitted by IAS 27.

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

New and amended standards and interpretations not applied

There were no new standards or interpretations effective for the first time for periods beginning on or after 1 January 2017 that had a significant effect on the Group or Company's financial statements. Furthermore, none of the amendments to standards that are effective from that date had a significant effect on the financial statements.

At the date of authorisation of these financial statements, IFRS 9 "Financial instruments" was issued to replace IAS 39, but will not become effective until accounting periods beginning on or after 1 January 2018 and has not been applied in these financial statements. The Group's financial assets predominantly comprise equity investments held at fair value and the introduction of IFRS 9 is not expected to have a material impact on the reported results and financial position of the Group.

Also at the date of authorisation of these financial statements, IFRS 15 "Revenue from contracts with customers" was issued but will not become effective until accounting periods beginning on or after 1 January 2018 and IFRS 16 "Leases" was issued but will not become effective until accounting periods beginning on or after 1 January 2019. As the Group's investments are held at fair value through profit or loss and the revenue contracts and leases are held at SPV level, the introduction of IFRS 15 and IFRS 16 is not expected to have a material impact on the reported results and financial position of the Group.

Other accounting standards have been published and will be mandatory for the Company's accounting periods beginning on or after 1 January 2018 or later periods. The impact of these standards is not expected to be material to the reported results and financial position of the Group.

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

At 31 December 2017 and 2016 the carrying amounts of cash and cash equivalents, receivables, payables, accrued expenses and short term borrowings reflected in the financial statements are reasonable estimates of fair value in view of the nature of these instruments or the relatively short period of time between the original instruments and their expected realisation. The fair value of advances and other balances with related parties which are short-term or repayable on demand is equivalent to their carrying amount.

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

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

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

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

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

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

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

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

Fair value is defined as the amount for which an asset could be exchanged between knowledgeable willing parties in an arm's length transaction. Fair value is calculated on an unlevered, discounted cash flow basis in accordance with IFRS 13 and IAS 39.

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

Financial liabilities are classified according to the substance of the contractual agreements entered into.

All financial liabilities are initially recognised at fair value net of transaction costs incurred. All financial liabilities are recorded on the date on which the Group becomes party to the contractual requirements of the financial liability.

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

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

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

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

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

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

Incremental costs directly attributable to the issue of new shares are shown in share premium as a deduction from proceeds.

Incremental costs include those incurred in connection with the placing and admission which include fees payable under a placing agreement, legal costs and any other applicable expenses.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

2. Critical accounting judgements, estimates and assumptions

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

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

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

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

Useful lives are based on the Investment Manager's estimates of the period over which the assets will generate revenue which are periodically reviewed for continued appropriateness. The standard assumption used for the useful life of a wind farm is 25 years. The actual useful life may be a shorter or longer period depending on the actual operating conditions experienced by the asset.

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

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

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

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

3. Investment management fees

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

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

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

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

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

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

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

4. Return on investments

5. Operating expenses

The fees to the Company's Auditor include £3,700 (2016: £3,600) payable in relation to a limited review of the half-yearly report. During the year, BDO was paid £22,000 (2016: £56,000) in relation to capital raises of the Company which was included in share issue costs. Total fees payable to BDO for non-audit services during the year were £25,700 (2016: £112,600).

6. Taxation

The tax credit for the year shown in the Statement of Comprehensive Income is lower than the standard rate of corporation tax of 20 per cent. to 31 March 2017 and 19 per cent. from 1 April 2017 (2016: 20 per cent.). The differences are explained below.