Greencoat UK Wind Regulatory News (UKW)

23 February 2023

GREENCOAT UK WIND PLC 

(the "Company")

Greencoat UK Wind PLC reports results for the year ended 31 December 2022

Greencoat UK Wind PLC today announces the final results for the year to 31 December 2022 as below.

These results were approved by the Board of Directors on 22 February 2023.

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

The Company provides investors with the opportunity to participate directly in the ownership of UK wind farms, so increasing the resources and capital dedicated to the deployment of renewable energy and the reduction of greenhouse gas emissions.

2022 Highlights

Generation

· The Group's investments generated 4,362GWh of sustainable electricity.

· Net cash generation (Group and wind farm SPVs) was £560.1 million.

High quality investments

· Acquisition of Twentyshilling and a net 12.5 per cent stake in Hornsea 1 increased the portfolio to 45 operating wind farm investments and net generating capacity to 1,610MW as at 31 December 2022.

Dividends and balance sheet

· The Company has declared total dividends of 7.72 pence per share with respect to the year and is targeting a dividend of 8.76 pence per share for 2023 (increased in line with December 2022 RPI).

· Aggregate Group Debt of £1,780 million as at 31 December 2022, equivalent to 31 per cent of GAV.

Key Metrics

Commenting on today's results, Shonaid Jemmett-Page, Chairman of Greencoat UK Wind, said:

"2022 was another significant year for the Company, as we continue to build on our well-established track record. Our simple, low risk, and proven strategy has enabled us to increase our dividend once more, and to target a dividend of 8.76p per share for 2023, a 13.4% increase reflecting December's RPI."

"The year represented another significant period of growth, with £1.2 billion invested in high quality assets, increasing our portfolio generating capacity to 1.6GW. This underlines the size and scale that the Group has attained since listing."

"We continue to see an attractive investment pipeline, both onshore and offshore, and remain strongly positioned to deliver more value-accretive acquisitions to further enhance returns for our shareholders."

Annual report

A copy of the annual report has been submitted to the National Storage Mechanism and will shortly be available for inspection at https://data.fca.org.uk/#/nsm/nationalstoragemechanism. 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:

There will be a conference call at 9.30am today for analysts and investors. Analysts and investors can register for the event at https://www.netroadshow.com/events/login?show=dec18574&confId=47193.

Presentation materials will be posted on the Company's website, www.greencoat-ukwind.com, from 9.30am.

For further information, please contact:

Greencoat UK Wind PLC 020 7832 9425

Stephen Lilley

Laurence Fumagalli

Tom Rayner

Headland Consultancy  020 3805 4822

Stephen Malthouse

Rob Walker

Defining Characteristics

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

· The Group is invested solely in UK wind farms.

· Wind is the most mature and largest scale renewable technology.

· The UK has a long established regulatory regime, high wind resource and £100 billion worth of wind farms in operation.

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

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

· Low gearing is important to ensure a high level of cash flow stability and higher tolerance to downside sensitivities.

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

Chairman's Statement

I am pleased to present the Annual Report of Greencoat UK Wind PLC for the year ended 31 December 2022.

Performance

2022 was another significant year for the Company with £1,184 million invested and 4,362GWh of renewable electricity generated.

During the year, portfolio generation was 5 per cent below budget as a result of lower wind in the second half of the year but power prices were well above budget, primarily reflecting high gas prices. Net cash generated by the Group and wind farm SPVs was £560.1 million, providing cover of 3.2x on £175.8 million of dividends paid in the year. The Company has reinvested over £340 million of excess cash generation during the year.

By the end of 2022, the portfolio was generating sufficient electricity to power 1.8 million homes and avoiding CO2 emissions of approximately 2.0 million tonnes per annum through the displacement of thermal generation.

Dividends and Returns

Declared dividends for the year total 7.72 pence per share, with the fourth and final quarterly dividend of 1.93 pence per share to be paid on 24 February 2023. With our continuing strong cash flow and dividend cover we can confidently target a dividend of 8.76 pence per share with respect to 2023, increased in line with December's RPI of 13.4 per cent.

The Total Shareholder Return for the year was 13.5 per cent.

NAV per share increased from 131.7 pence per share (ex dividend) on 31 December 2021 to 165.2 pence per share (ex dividend) on 31 December 2022, an increase of 33.5 pence (25.4 per cent) during the year. Approximately half of the increase in NAV per share is attributable to strong cash generation in the year and half is attributable to an increase in the portfolio valuation, reflecting higher power prices and higher inflation, offset by an increase in the discount rate. Since listing, NAV per share has increased by significantly more than RPI.

Given the increase in interest rates, the Company increased its discount rate twice during the year to a level that is similar to that which applied at listing a decade ago. As at 31 December 2022, the blended portfolio discount rate was 8.0 per cent. This is an unlevered discount rate and is therefore different to the discount rates quoted by peers. The equivalent levered discount rate (assuming 30 per cent gearing) is approximately 10 per cent, which delivers a net return to investors of approximately 9 per cent. Consequently, given this greater return, the Company has been and is able to grow NAV per share significantly more than its peers in addition to generating a similar dividend yield.

Investment

In June, we completed our £51.2 million acquisition of Twentyshilling. This followed our acquisition of Windy Rig in December 2021. Both wind farms were acquired from Statkraft once they were operational, following commitments made in 2019. Given current and forecast high power prices, we expect these investments in fully merchant wind farms to continue to perform well.

In August, we acquired a net 12.5 per cent stake in Hornsea 1, a 1,200MW offshore wind farm. Hornsea 1 is our largest single investment (£1.1 billion, 19 per cent of our portfolio) and provides great stability to our cash flows through its index linked CFD revenues.

During the year, we also provided a further £27.4 million of construction finance to the Kype Muir Extension wind farm project.

We look forward to adding both Kype Muir Extension and South Kyle to our portfolio in Q2 2023.

Gearing

As at 31 December 2022, Aggregate Group Debt was £1,780 million, equating to 31 per cent of GAV (limit 40 per cent). Debt outstanding comprised £900 million of fixed rate term debt at Company level, £200 million drawn under the Company's revolving credit facility and £680 million being the Group's share of limited recourse debt in Hornsea 1.

Outlook and Strategy

Wind continues to be the most mature and widely deployed renewable energy technology in the UK (27 per cent of GB electricity generation in 2022) with an offshore wind target of 50GW for 2030 being an important Government target in the delivery of 2050 net zero emissions targets. At the same time, the Government has tried to reduce the effect of very high gas and power prices that have resulted from Russia's invasion of Ukraine that have exacerbated the "cost of living crisis" by introducing a levy on electricity generators at 45 per cent above an index linked £75/MWh from 1 January 2023. It is likely that the Group will pay more tax over the next few years which will help to lower the cost to consumers.

Throughout 2022, we discounted forecast power prices significantly given their volatility and also given the risk of Government intervention. As the details of the Electricity Generator Levy are now known and forecast future power prices are now lower, the discount that we are applying has been reduced appropriately. This approach has enabled us not just to maintain NAV from Q3 to Q4, as our peers have mostly managed, but to increase it as the discount unwinds.

Our Investment Objective has remained unchanged over the last 10 years since listing: to provide shareholders with an annual dividend that increases in line with RPI inflation while preserving the capital value of the investment portfolio in real terms. This is achieved through a focused strategy of investing only in wind farms and only in the UK and maintaining a balanced exposure to power prices. Our intention remains to adhere to this core strategy.

Growth by acquisition brings benefits to shareholders as:

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

• equity raisings following acquisitions provide additional opportunity for shareholders to increase their investment in the Company;

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

• equity raisings increase the liquidity of shares in the market.

Significantly, during 2022 we invested £1.1 billion into Hornsea 1, one of the largest offshore wind farms in the world, increasing the proportion of offshore wind to 44 per cent of the portfolio and also invested £79 million into Twentyshilling and Kype Muir Extension, both subsidy free wind farms. The Group reinvested £340 million during the year, which is expected to contribute to further build-out of renewables capacity in the UK. We expect to continue to see a range of attractive CFD (largely offshore) and subsidy free assets within our significant acquisition pipeline alongside wind farms accredited under the ROC regime.

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

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

Health and Safety and the Environment

As a responsible investor in operating wind farms, the Company takes its health and safety responsibilities very seriously. We work with our Investment Manager to promote the highest standard of health, safety and environmental management practices in managing our portfolio of investments. Detailed key performance indicators and the results of audits are regularly reviewed by the Board and action taken where necessary. We continue to monitor the standards maintained by the operators of our wind farm investments, to ensure that these are at least in line with the wider industry, while seeking continuous improvement.

Climate Change

As a Company investing in wind farms, our strategy and activities naturally make a positive contribution toward the worldwide goal of achieving a net zero carbon emissions economy and limiting global warming to 1.5oC. Detailed disclosures can be found in the Strategic Report.

The Board and Governance

At the AGM, I will retire from the Board and Lucinda Riches C.B.E. will become the new Chairman, with Nick Winser C.B.E. also taking over the role as the Company's Senior Independent Director.

I am the last of the original Board and have greatly enjoyed my role in helping build a Company that started a new sector and has been so influential in enabling fresh capital to come into that sector, building out so much new renewable generating capacity as a consequence of doing so. I leave the Company in very good hands and will look forward to watching its progress as an interested observer.

The external evaluation of the Board raised no significant issues.

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

Annual General Meeting

Our AGM will take place at 2pm on 28 April 2023 at the office of the Investment Manager.

Details of the formal business of the meeting are set out in a separate circular which is sent to shareholders with the Annual Report.

Shonaid Jemmett-Page

Chairman

22 February 2023

Investment Manager's Report

The Investment Manager

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

Since the Company's listing in March 2013, the investment management team has been led by Stephen Lilley and Laurence Fumagalli.

In April, Schroders plc completed the acquisition of a 75 per cent interest in the Investment Manager. The Investment Manager continues to operate as an independent business as part of Schroders Capital, the private markets division of Schroders plc. Schroders plc is a global asset manager and wealth manager, which delivers a broad range of investments for institutions, intermediaries and high net worth individuals, with AUM of over £700 billion.

Investment Portfolio

Operating portfolio as at 31 December 2022:

Portfolio Performance

Portfolio generation for the year was 4,362GWh, 5 per cent below budget.

Portfolio generation was slightly above budget for the first half of the year, but fell below budget in the second half of the year as a result of low wind.

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

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 (less than 2 per cent over 30 years).

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

[1] Includes curtailed generation.

[2] Generation from September to December 2022.

[3] Generation from July to December 2022.

[4] 2022 budget reduced to reflect scheduled grid outages (Clyde), major component replacements (Burbo Bank Extension) and grid load management (Twentyshilling).

[5] Annual budget increased to reflect turbine upgrades (Bin Mountain, Clyde, Langhope Rig, Screggagh and Tappaghan) and reduced electrical losses (Red House).

Notable issues affecting portfolio availability were:

· a blade failure at Windy Rig;

· long duration outages at Corriegarth due to generator issues and a shortage of skilled technicians;

· various stops due to major component replacements and delays in spares procurement at Burbo Bank Extension;

· various pitch motor exchanges and generator issues at Dunmaglass; and

· work scheduling issues affecting availability of parts and technicians at Cotton Farm, Earl's Hall Farm and Yelvertoft.

In general, the portfolio performed well and in line with expectations.

During the year, the Investment Manager ran a tender for operational management services at Corriegarth, Cotton Farm, Earl's Hall Farm, Kildrummy and Stroupster. As a result, new Operational Management Agreements were entered into with EnergyPro Asset Management.

Health and Safety and the Environment

Health and safety is of key importance to both the Company and the Investment Manager.

The Investment Manager is an active member of SafetyOn, the UK's leading health and safety focused organisation for the onshore wind industry. The Investment Manager also has its own health and safety forum, chaired by Stephen Lilley, where best practice is discussed and key learnings from incidents from across the industry are shared.

During the year, routine health and safety audits were conducted across 20 sites by an independent consultant. In addition, the Investment Manager undertook 90 safety walks. No material areas of concern were identified from all audits and safety walks performed in the year.

The Company has continued to contribute to local community funds and to invest in a range of local environmental and social projects. In addition, the Investment Manager explored ways to provide grant funding to academic research and non-profit projects to develop the industry's knowledge on wind turbine blade recycling, and we have launched a £250,000 programme to advance knowledge on blade recycling, repurposing and recovery, as well as associated skills development in this area.

During the year, the portfolio generated sufficient electricity to power 1.5 million homes and avoided CO2 emissions of approximately 1.7 million tonnes through the displacement of thermal generation.

Investment

During the year, the Investment Manager priced 42 wind farms totalling 2,297MW. Of the 42 wind farms priced, 1 new investment was made by the Group (Hornsea 1), 1 was acquired by another buyer, 6 are no longer being pursued by the Group, and 34 are subject to continuing discussions. In total, secondary market transactions comprising 27 UK wind farms were completed in 2022.

The following table lists investments in the year to 31 December 2022:

[1] Includes £699.4m of limited recourse debt.

During the year, the Group provided a further £27.4 million of construction finance to the Kype Muir Extension wind farm project (target commissioning in Q2 2023). As at 31 December 2022, the Group's total investment in Kype Muir Extension (including accrued interest) was £39.4 million. The Group has entered into arrangements to acquire a 49.9 per cent stake in Kype Muir Extension once fully commissioned for a headline consideration of £51.4 million. The construction loan will be repaid in full upon acquisition.

On 24 June 2022, the Group acquired Twentyshilling from Statkraft for a total consideration of £51.2 million (commitment made in 2019). The Group also paid £3.1 million of deferred consideration in relation to Windy Rig, acquired from Statkraft in December 2021.

On 26 August 2022, the Group acquired a net 12.5 per cent stake in Hornsea 1 from Global Infrastructure Partners for a total cash consideration (including cash and working capital) of £402.5 million. The Group's share of limited recourse debt was £699.4 million, giving a total enterprise value of £1,101.9 million for the Group's net 12.5 per cent stake.

The acquisition of the South Kyle wind farm from Vattenfall for £320 million is expected to complete in Q2 2023 once fully commissioned (commitment made in 2020).

Gearing

As at 31 December 2022, Aggregate Group Debt was £1,780 million, equating to 31 per cent of GAV (limit 40 per cent). Debt outstanding comprised £900 million of fixed rate term debt at Company level, £200 million drawn under the Company's revolving credit facility and £680 million being the Group's share of limited recourse debt in Hornsea 1.

More details in relation to the Company's debt facilities can be found in note 13 to the financial statements.

Financial Performance

Power prices during the year were well above budget, primarily reflecting high gas prices. The average N2EX Day Ahead auction price was £203.79/MWh (2021: £117.43/MWh). The average price captured by merchant assets in the portfolio (before PPA discounts) was £181.76/MWh (2021: £103.35/MWh). The capture discount in the year was thus 11 per cent, which compares with a 30 per cent discount to the forward curve assumed in the 31 December 2022 NAV.

Net cash generated by the Group and wind farm SPVs was £560.1 million, providing cover of 3.2x dividends paid during the year.

Cash balances (Group and wind farm SPVs) increased by £43.8 million to £160.9 million over the year.

(1) Alternative Performance Measure as defined below.

(2) Excludes £699,451k of limited recourse debt acquired in Hornsea 1.

The following 2 tables provide further detail in relation to net cash generation of £560.1 million:

1 Consolidated Statement of Cash Flows.

2 Note 9 to the financial statements.

3 £1,163k professional fees plus £500k facility arrangement fees per note 13 to the financial statements.

Investment Performance

The following table provides further detail in relation to the movement in portfolio valuation of £383.9 million:

Total dividends of £175.8 million were paid in 2022. Total dividends of £178.9 million have been paid or declared with respect to 2022 (7.72 pence per share). The target dividend with respect to 2023 is 8.76 pence per share (increased in line with December 2022 RPI).

Reconciliation of Statutory Net Assets to Reported NAV

1Includes £679,504k of limited recourse debt at Hornsea 1, not included in the Consolidated Statement of Financial Position.

NAV Sensitivities

NAV is equal to GAV less Aggregate Group Debt.

GAV is the sum of:

· DCF valuations of the Group's investments;

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

· other relevant assets and liabilities of the Group.

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

The base case discount rate is a blend of a lower discount rate for fixed cash flows and a higher discount rate for merchant cash flows. The blended portfolio discount rate as at 31 December 2022 was 8.0 per cent (31 December 2021: 7.2 per cent), which includes an aggregate 0.8 per cent increase in the underlying discount rate during the year reflecting higher interest rates.

The DCF valuation is produced by discounting the individual wind farm cash flows on an unlevered basis. The equivalent levered discount rate (assuming 30 per cent gearing) is approximately 10 per cent.

Base case long term inflation assumptions are 3.5 per cent to 2030 and 2.5 per cent thereafter for RPI and 2.5 per cent (all years) for CPI. Higher inflation assumptions are used for 2023 (8.0 per cent RPI and 5.0 per cent CPI).

Base case energy yield assumptions are P50 (50 per cent probability of exceedance) forecasts 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.

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. Short term power price assumptions reflect the forward curve as at 16 January 2023 with an appropriate discount applied reflecting the higher volatility associated with short term prices.

In 2023, fixed cash flows are forecast to contribute 50 per cent of total cash flows (50 per cent merchant). Over the life of the portfolio, fixed cash flows are forecast to contribute 55 per cent of the total DCF value (45 per cent merchant).

Outlook

There are currently over 28GW of operating UK wind farms (14GW onshore plus 14GW offshore). In monetary terms, the secondary market for operating UK wind farms amounts to approximately £100 billion. The Group's market share is approximately 6 per cent. As at 31 December 2022, the average age of the portfolio was 7 years (versus 5 years at listing in March 2013).

Driven by recent security of supply and cost concerns, as well as by net zero climate objectives, the UK is now targeting 50GW of offshore wind by 2030, supported by the CFD regime. New build onshore wind and solar are also expected to contribute, both on a subsidy free basis and supported by the CFD regime. Over 10GW of total capacity was awarded in CFD Allocation Round 4, announced on 7 July 2022.

It is anticipated that the Group will continue to invest in ROC, CFD and subsidy free wind farms. At all times, the Group will maintain a balanced portfolio, in line with the Company's Investment Objective.

Power prices during the year were well above budget, primarily reflecting high gas prices. The average N2EX Day Ahead auction price was £203.79/MWh (2021: £117.43/MWh). Forward power prices over the period 2023-2026 remain high. High power prices again drove strong cash generation in 2022 and the Group should continue to benefit from strong cash generation over the next few years through its balanced exposure to power prices.

High power prices have inevitably been considered by the Government in the context of balancing the country's fiscal position. We now have clarity in relation to the Electricity Generator Levy at a rate of 45 per cent of annual average power revenue above an index linked £75/MWh. CFDs are excluded from the levy and the Group also benefits from a £10 million annual allowance. The levy applies from 1 January 2023 until 31 March 2028. The levy has been fully modelled and incorporated into the cash flow forecast that underlies the calculation of NAV. We believe that the new clarity should lead to a material reduction in the "uncertainty discount" that has affected the sector during the second half of last year. We continue to apply a conservative discount to future power prices, albeit at an appropriately reduced level. The net result has been a material increase in NAV per share.

The Government's Review of Electricity Market Arrangements ("REMA") continues, with a second round of consultation expected shortly. The aim of REMA is to accommodate a higher proportion of renewable generation and storage on the electricity network in line with the UK's target to decarbonise the electricity sector by 2035. The ultimate market design is thus expected to be supportive for the Group's portfolio and for further investment opportunities.

Two other key macro themes during the year were high inflation and rising interest rates. We have increased the blended portfolio discount rate by an aggregate 0.8 per cent to 8.0 per cent reflecting higher interest rates. Nonetheless, the effect of the increased discount rate has been more than offset by increased inflation given the index linked nature of the portfolio cash flows (+15 pence in NAV per share from an increase in inflation assumptions and -10 pence from an increase in the discount rate). We believe that the index linked nature of portfolio cash flows is an important consideration for investors.

It is also important to note that 8.0 per cent is the unlevered discount rate. The equivalent levered discount rate (assuming 30 per cent gearing) is approximately 10 per cent. The Company's ongoing charges ratio is less than 1 per cent. Thus the net return to investors should be approximately 9 per cent.

Assuming a dividend yield of 5 per cent, the 9 per cent total return would be delivered through a combination of dividends (5 per cent) and growth in NAV per share (4 per cent). Given the underlying index linked nature of the portfolio cash flows, both the dividend yield and growth in NAV per share benefit from a high degree of inflation protection. 2022 dividend cover was 3.2x and, in line with the Company's dividend policy, the target dividend for 2023 has been increased by December's RPI to 8.76 pence per share.

We believe that a 9 per cent total return, with inflation protection, should be very attractive to investors in the new higher interest rate environment.

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.

Strategic Report

Introduction

The Directors present their Strategic Report for the year ended 31 December 2022. Details of the Directors who held office during the year and as at the date of this report are given below.

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.

The Company provides investors with the opportunity to participate directly in the ownership of UK wind farms, so increasing the resources and capital dedicated to the deployment of renewable energy and the reduction of greenhouse gas emissions.

The target return to investors is an IRR net of fees and expenses of 8 per cent to 9 per cent. The 2022 dividend of 7.72 pence per annum is targeted to increase in line with December 2022 RPI to 8.76 pence for 2023. Progress on the objectives is measured by reference to the key metrics above.

Investment Policy

The Group invests in UK wind farms predominantly with a capacity of over 10MW.

Low gearing ensures that the annual dividend is sufficiently protected against lower power prices. This means that the Group also has the ability to benefit from higher power prices as it is not required to enter into long term fixed price contracts.

The Group used debt facilities to make additional investments in the year and intends to continue to use short term debt facilities to make further investments. The Group will look to repay its short term debt facilities by refinancing them with longer term debt facilities or in the equity markets 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.

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 Schroders Greencoat 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, 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 0.93 per cent of the weighted average NAV for the year to 31 December 2022. This is made up as follows and has been calculated using the AIC recommended methodology.

1 Other ongoing expenses do not include £1,383k of management and administration fees relating to the wind farm SPVs that is recharged to them, £54k of Board effectiveness review fees and £253k of broken deal costs.

Assuming no further changes in NAV, the 2023 ongoing charges ratio is expected to be 0.91 per cent.

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

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 below.

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 principal 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 principal risks and to mitigate and minimise the impact of those risks should they crystallise. This risk matrix is also reviewed and updated to identify emerging risks, such as climate related risks, and to determine whether any actions are required. This enables the Board to carry out a robust assessment of the risks facing the Group, including those risks that would threaten its business model, future performance, solvency or liquidity.

The risk appetite of the Group is considered in light of the principal risks and their alignment with the Company's Investment Objective. The Board considers the risk appetite of the Group and the Company's adherence to the Investment Policy in the context of the regulatory environment taking into account, inter alia, gearing and financing risk, wind resource risk, the level of exposure to power prices and environmental and health and safety risks.

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 materialises.

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 the Company's 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 raising of equity.

Higher interest rates 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 or both. Both would increase the investment return and thus would provide a high 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 investee companies' revenues.

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.

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 (less than 2 per cent over 30 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 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 electricity, is mitigated by purchasing wind farms, where possible, with a proven operating track record.

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

Asset Life

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

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

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

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 also engages an independent health and safety consultant to ensure the ongoing appropriateness of its health and safety policies.

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

Going Concern

As further detailed in note 1 to the financial statements, the Directors have a reasonable expectation that the Company and the Group have adequate resources to continue in operational existence from the date of approval of this report to at least February 2024. Accordingly, they continue to adopt the going concern basis in preparing the financial statements.

Longer Term Viability

As further disclosed below, 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 is deemed appropriate, given the long term nature of the Group's investments which are modelled over 30 years, coupled with its long term strategic planning horizon.

In considering the prospects of the Group, the Directors looked at the key risks facing both the Group and the investee companies, focusing on the likelihood and impact of each risk as well as any key contracts, future events or timescales that may be assigned to each key risk. The Directors also tested and are comfortable that the Company would continue to remain viable under several robust downside scenarios, including loss of government subsidies and a significant decline in long term power price forecasts, both considered principal risks and uncertainties affecting investee companies.

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.

The Board does not believe that the lower power prices projected in the high transition risk scenario, will diminish the longer term viability of the Company.

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.

Directors' Responsibilities Pursuant to Section 172 of the Companies Act 2006

The Directors are responsible for acting in a way that they consider, in good faith, is the most likely to promote the success of the Company for the benefit of its members. In doing so, they should have regard for the needs of stakeholders and the wider society. The Company's objective 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.

The Company provides investors with the opportunity to participate directly in the ownership of UK wind farms, so increasing the resources and capital dedicated to the deployment of renewable energy and the reduction of greenhouse gas emissions. The Board is also aware of its responsibility for the risk management of the Group's climate related risks and for transparent disclosure of these risks, appreciating how this is integral to the success of the Company.

Key decisions are those that are either material to the Company or are significant to any of the Company's key stakeholders, as defined in the Corporate Governance Report. The Company's engagement with its key stakeholders, including the Investment Manager, is discussed further in the Corporate Governance Report. The key decisions detailed below were made or approved by the Directors during the year, with the overall aim of promoting the success of the Company while considering the impact on its members and wider stakeholders.

The Board has approved total dividends of 7.72 pence per share with respect to the year and shareholders voted 99.97 per cent in favour to approve the Company's dividend policy at the AGM on 28 April 2022. The Board is confident that with the Group's continuing strong cash flow and dividend cover, the Company can target a dividend of 8.76 pence per share for 2023, which the Board expect to contribute to the Company's target return to investors of an IRR of 8 per cent to 9 per cent, net of fees and expenses.

Following recommendation from the Investment Manager, the Directors considered each of the Company's investments in the context of the Company's Investment Policy, availability of financing and the potential returns to investors. They also considered each investment in the context of sustainability and its impact on the surrounding community.

During the year, the Company did not issue any further shares through equity raisings.

Board Composition

During the year, Nick Winser C.B.E. was appointed as a non-executive Director of the Company with effect from 1 January 2022 and Lucinda Riches C.B.E. succeeded William Rickett C.B. as Senior Independent Director, with effect from 28 April 2022, following his retirement from the Board.

As disclosed in the Corporate Governance Report, the Board engaged Condign Board Consulting to perform a full external review of the effectiveness of the Board during the year. The independent review included a review of the Board's culture and concluded that the Board and its committees were committed and appropriately composed to promote the success of the Company.

Environmental, Social and Governance

The Group's approach

The Group invests in wind farms and the environmental benefits of renewable energy are proven and key to delivering the Government's and society's climate change objectives. As the largest renewable infrastructure fund and one of the largest owners of wind farms in the UK, the Company continues to prove the viability of clean energy as a robust sector for investment.

The Group now owns over 1.6GW of installed capacity across 45 onshore and offshore operating wind farms. By dedicating resources to the deployment of renewable energy, the Group is playing an active role in reducing the UK's greenhouse gas emissions and accelerating a move towards net zero for the whole economy. Since listing, the Group's operating wind farms have produced 18.8TWh of clean energy, saving 7.4 million tonnes of CO2.

During the year, the Group's wind farms generated 4,362GWh of renewable electricity. By the end of 2022, the portfolio was generating sufficient electricity to power 1.8 million homes and avoiding approximately 2.0 million tonnes of CO2 emissions per annum through the displacement of thermal generation.

To sustain the long term success of the business, the Company acknowledges and understands the importance of effective management of ESG matters for all stakeholders.

The Company continues to have an important role to play in championing both responsible investment and the development of the renewable energy sector. This is achieved through continuous engagement with all industry stakeholders and transparently sharing its ESG approach and results with investors.

Responsible investing principles have been applied to each of the investments made, which require the Group to make reasonable endeavours to procure the ongoing compliance of its investee companies with its policies on responsible investment.

Although the non-executive Board has overall responsibility for the activities of the Company and its investments, the day-to-day management of the business is delegated to the Investment Manager. This includes responsibility for ESG matters and applies as investments are being made and continuously during the life of each wind farm. The Investment Manager assesses how ESG should be managed and the Company has developed its ESG policy in accordance with the Investment Manager's ESG Framework Policy. The ESG Policy of the Company is approved and overseen by the Company's Board.

The Group will continue to lead the way in encouraging responsible investment to accelerate the development of the UK's wind energy sector further and will do this in a way that maximises returns for our shareholders and creates benefits for the communities and the natural environment in which its wind farms operate.

The Investment Manager has representation on the boards of the operating wind farm companies which oversee performance, including on ESG matters, and meet quarterly. From these ongoing reviews, the Investment Manager reports quarterly to the Company's Board, with data on production, wind farm availability, key events and health and safety performance.

This robust management structure enables the Investment Manager to oversee ESG issues effectively throughout the lifecycle of the Group's wind farms:

Screening

· screen against investment mandate and restrictions; and

· assess the ability of the investment to comply with ESG standards.

Due Diligence

· rigorously assess ESG risks based on commitment, capacity, track record and features of the wind farm; and

· identify mitigation plans.

Investment decision

· identify and address ESG issues in extracts of the Investment Manager's Investment Committee papers that inform investment decisions; and

· determine and cost plans to address ESG issues, and price into the investment decision process.

Asset Management

· establish appropriate governance structures;

· comply with all relevant laws and regulations;

· ensure ongoing monitoring and management of ESG issues;

· manage impacts on the natural habitat surrounding the wind farms under management;

· engage with and support the local communities;

· perform due diligence on third parties; and

· ensure business integrity with a focus on avoiding money laundering, negligent or corrupt practices.

Environment

As one of the largest owners of wind farms in the UK, the Group is focused on taking actions to support climate change mitigation through the generation of renewable energy, while minimising the potential impacts that the operation of wind farms may have on local habitats and the environment.

The world continues to face a serious climate challenge, and the UK is taking an active role as a global leader in greenhouse gas emissions reduction. The Company supports the UK Government's strategy to be net zero by 2050 by allowing developers and utilities to recycle their capital, and by demonstrating the attractive long term returns in the industry through our prudent management of wind farms, thereby reducing the cost of capital.

The Group is committed to protecting the local environment around its wind farms, recognising the potential impact that wind farms can have on local terrestrial and aquatic wildlife and landscape.

As such, the Group seeks to protect the local environment around its wind farms by using robust environmental management systems. These include policies, periodic risk assessments, monitoring and regular reporting to the Board and the boards of each of the wind farm companies. Through these measures, the Group also ensures compliance with all applicable laws, regulations and planning permissions as administered by the Environment Agency, Health Protection Agency, local authorities, Ofgem, UREGNI or any other relevant regulatory body, including the data reporting obligations under Renewable Obligation Order 2009.

The Group's core activities include:

· maintaining management systems to evaluate the potential risks and impacts of its activities and avoiding or mitigating environmental impacts on biodiversity, air quality, noise, and waste management where relevant;

· running habitat management plans at its wind farms;

· undertaking additional environmental impact assessments or undergoing regular monitoring, as required;

· seeking to work with partners who uphold good industry standards - from operational managers whose management systems comply with the requirements of ISO 14001:2015 (environmental management systems) to the material contractors used; and

· regular reporting to the Board and the boards of each of the wind farm companies.

During the year, the Investment Manager also set up its first grant-making programme in partnership with BizGive, an online platform that connects organisations to external impact partners, such as universities, charities and community groups. In addition to regular community funding, a £250,000 impact programme was launched to fund and support academic research and non-profit projects that advance the industry's knowledge around wind turbine blade recycling, repurposing and recovery. The programme attracted applications relating to a wide range of unique projects, with successful applicants due to be announced shortly.

CASE STUDY

Peatland Management

Healthy peatlands provide food and shelter to wildlife and are valuable biodiversity resources. They are also critical to mitigating climate change. Peatlands store large quantities of carbon which can be easily disturbed and released through overgrazing, burning, cutting and drainage, activities that may occur during the construction of a wind farm. Unless properly managed, the carbon released during construction can adversely affect the carbon payback period of a project, undermining one of the core objectives of renewable energy generation, which is to reduce net greenhouse gas emissions. The Group proactively manages peat restoration works on all sites.

At Dunmaglass, monitoring surveys were completed during the year and the next phase of peatland restoration, covering 10-12 hectares, began.

At Tappaghan, the main focus is on managing grazing and improving drainage. Grazing on peatlands is a delicate balance. Too many livestock can lead to overgrazing and peat erosion and too little or no grazing can lead to a build-up of leaf litter and old, woody vegetation, which makes it difficult for low-growing peatland plants to compete. When tall grass or shrubs dominate the overall species of the area, diversity declines and the risk of wildfires can also increase. Fencing an area of peatland on site helped to maintain low stocking densities during the summer period and prevented grazing over winter. To raise water levels, strip pile dams were installed along a drainage channel within the surrounding area, which promotes the growth of a variety of bog mosses, which are key species in building blanket bog habitat.

Social

It is important that the wind farms are truly part of the community. The Group's approach aids long term support for wind farms in the UK, which helps the industry to continue its build-out.

Supporting worker safety and fair employment on our sites

Worker safety is a top priority for the Group. The Group also recognises the need for people to be paid fairly for the work they do and to have appropriate working conditions. By doing this, it helps to sustain and grow the local communities in which its wind farms operate.

The Group achieves this through a range of activities, including:

· complying with all applicable laws relating to employment, occupational health and safety, human rights, prevention of human trafficking and modern slavery, public safety and security and community matters, including the Wind Turbine Safety Rules;

· implementing health and safety best practices through wind farm specific health and safety policies, project management, contractual arrangements, staff training and stakeholder education;

· assessing and monitoring health and safety practices through wind farm specific risk identification and prevention activities. During the year, these activities included: regular safety checks carried out by the operations and maintenance service providers at all wind farms; safety walks by the Investment Manager's team at 90 wind farms; independent health and safety audits by an accredited professional at 20 wind farms; and 10 lifting operations and equipment audits; and

· reporting on key health and safety data regularly, with escalation and rapid response procedures in place in case of emergency.

As a member of Renewable UK, the UK's leading wind energy trade association, the Company is keen to work with other stakeholders to develop the industry further. In addition, the Investment Manager is an active member of SafetyOn, the UK's leading health and safety focused organisation for the onshore wind industry.

Supporting the communities around our wind farms

The Group cares about the communities around its wind farms and engages with local communities to ensure respect for land and access rights and that its wind farms are managed in accordance with planning permissions.

The Group holds regular dialogue with community funds and provides financial support to local groups through community benefit schemes that fund local projects.

These funds help deliver a range of services, from improving local amenities and infrastructure to aiding educational projects for local schools.

Diversity

The Board has a policy to base appointments on merit and against objective criteria, with due regard for the benefits of diversity, including both gender and ethnic 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 2 men and 3 women, 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. Currently, the Chairman, Audit Committee Chairman and Senior Independent Director positions are all held by women who represent 60 per cent of Directors on the Board. The Board is cognisant that it does not currently have ethnic representation, contrary to the new FCA diversity guidelines, and this will be a key focus during future succession planning.

The Board recognises the importance of an inclusive and diverse Board in facilitating a collaborative culture and enhancing the delivery of the Company's strategic objectives. The Board will continue to monitor and actively work on ensuring that it maintains and nurtures a Board that is as diverse as possible.

The Investment Manager operates an equal opportunities policy and its partners and employees comprise 72 men and 32 women.

CASE STUDY

Clyde and the green skills training centre in South Lanarkshire

Providing communities that once depended on the fossil fuel industry with new training and employment opportunities is one of the ways the Group can support the transition to the net zero economy.

During the year, Clyde provided funding of £149,367 for the development of a state-of-the-art training centre in South Lanarkshire, Scotland that is providing former mining communities with the skills required in the green economy. As well as accreditations in home insulation, each student has a designated employment coach to ensure that every successful graduate will secure a green job from a local employer. The project aims to provide 250 jobs over the course of 3 years to the South Lanarkshire community.

Governance

Detailed disclosure on the Company's governance structure and activities can be found in the Corporate Governance Report.

Task Force on Climate Related Financial Disclosures (TCFD)

The Company strives to maintain the highest standards of corporate governance and effective risk identification and management at both Group and wind farm level. The Company supports the recommendations of the TCFD and refers to them for guidance on addressing climate related risks and opportunities across the Group and enhancing our disclosure.

These disclosures are categorised between the 4 thematic areas as recommended by the TCFD.

Governance

The Board is responsible for the determination of the Company's Investment Objective and Investment Policy. It also oversees the management of the Company and its investments, including ESG and climate related risks and opportunities. The Board delegates the day-to-day management of the business, including management of ESG matters, to the Investment Manager.

The Audit Committee also considers the Company's climate related disclosures in its Annual Report and Financial Statements.

As discussed in the Corporate Governance Report, the Board and the Investment Manager meet regularly and discuss risk management. Climate related risks are covered during these discussions, as they naturally arise from the Group's underlying investments and the Company's significant role in the decarbonisation of the UK economy. A formal risk matrix is maintained by the Investment Manager and reviewed and approved by the Board on an annual basis.

In addition, the Investment Manager has its own ESG committee that meets regularly to discuss ESG and climate related risks relating to the Group and other funds it manages. This committee has implemented an ESG Framework Policy that looks to establish best practice in climate related risk management, reporting and transparency. Representatives from the Investment Manager also sit on all of the boards of the wind farm companies, which meet quarterly and discuss ESG and climate related risk management.

Strategy

As the leading renewable infrastructure fund, invested in UK wind farms, the Company plays a significant role in the UK renewables industry. The Company's strategy and Investment Policy of acquiring operating wind capacity in the secondary market, enables developers and utilities to recycle capital, facilitating further renewable build-out and thus plays a significant role in increasing operating wind generating capacity.

The Company considers that the decarbonisation of the UK economy will continue to present a significant investment opportunity and the size of the Company's growth will be related to the success of the sector and the engagement of its stakeholders. In addition, companies are increasingly required to demonstrate their adherence to reducing their carbon footprints and this may increase demand for corporate PPAs and could provide the Group with an option to fix power prices, should it decide to do so, and mitigate volatility.

The Board and the Investment Manager monitor climate related risks and appreciate their impact on the Group. In the medium and long term, more extreme weather patterns arising from global warming have the capacity to damage infrastructure in general, including above ground grid infrastructure. It is considered unlikely, however, that significant damage will be caused to generating equipment that is designed to take advantage of weather systems. Nonetheless, appropriate insurance against property damage and business interruption is held for any such eventuality.

It is possible that the deployment of new renewable generating capacity, required to meet future UK and global emission reduction targets, could reduce the power price captured by the Group's portfolio investments. The Group's dividend policy, however, has been designed to withstand significant short term variability in generation or power price capture.

Climate related risks can be classified into two broad categories: (i) risks associated with the transition to a decarbonised economy; and (ii) risks associated with the physical impacts of climate change.

High Transition Risk Scenario

The Board and the Investment Manager continue to believe that the key factor that could impact the Company in the transition to a lower carbon economy is the variability of long term prices for wholesale electricity. In a lower carbon economy, where considerable build-out of renewable generation capacity will be required, there is a risk that the power price received by the Group's portfolio could be negatively impacted, depending on how successful the Government is in implementing its plan and depending on future electricity market design including the REMA consultation.

In a scenario in which global temperature increases are limited to only 1.5oC to 2oC (most typically associated with net zero), it is assumed that the Government is successful in implementing its plan in its entirety and the REMA consultation does not conclude in significantly different market design. In this scenario, the long term power price is lower than the base case used to calculate the Company's NAV. The lower long term power price, provided by a leading market consultant, reflects the wider deployment of low marginal cost renewable generation capacity, partially offset by the expected deployment of electrolysers as part of a growing hydrogen economy, increased electrification of transport and heat and the build-out of data centres. Modelling the lower long term power price would equate to approximately an 18 pence reduction in NAV per share.

The base case long term power price assumes significant renewable generation and other measures to reduce carbon emissions and represents the independent consultant's best estimate of likely outturn. The High Transition Risk Scenario assumes further measures. The precise effect on power price of any measures (in the base case and in the High Transition Risk Scenario) is highly uncertain and is highly dependent on future electricity market design. The High Transition Risk Scenario also assumes no other offsetting factors.

High Physical Risk Scenario

Physical risks may consist of acute physical risk, which can refer to event driven perils including increased severity and frequency of extreme weather events, and chronic physical risk, which can refer to longer term shifts in climate patterns that cause sea level rises, heat waves, droughts and desertification.

The Board and the Investment Manager continue to believe that a scenario where global temperature increases are significantly higher than 2oC would not lead to any significant physical risk to the Group's wind farms, which are designed to operate in extreme weather conditions and are typically not located in areas prone to flooding.

Alongside all scenarios, there is a risk that weather systems change as a result of higher temperature change scenarios but it is not possible, at this time, to determine whether this would impact the Group positively or negatively.

Risk Management

As a full scope UK AIFM, the Investment Manager has established a Risk Management Committee that meets on a quarterly basis to discuss, amongst other matters, the risk framework of the Group and investee companies including processes for identifying, assessing and managing climate related risks.

To ensure strong performance, the Group reinforces its specific oversight on environmental and social issues with a range of activities, including:

· appointing at least one director from the Investment Manager to the boards of the wind farm companies, to ensure monitoring and influence of both financial and ESG performance;

· carrying out due diligence to ensure that any new outsourced service providers are reputable and responsible organisations;

· carrying out due diligence during the acquisition of new wind farms in accordance with the Investment Manager's established procedures and ESG Framework Policy, and in compliance with the AIFMD Due Diligence Policy; and

· complying with all applicable anti-bribery and corruption and anti-money laundering laws and regulations and implementing policies to ensure this performance is in line with the policies of the Investment Manager.

The Investment Manager's Investment Committee comprises experienced senior managers. Whilst making investment decisions, due consideration is given to climate related risks as well as to opportunities identified during due diligence.

During the year, the Investment Manager, with the assistance of an independent consultant, completed a risk modelling exercise for a representative sample of the Group's SPV investments reflecting climate related hazard exposure over a future period of time.

Metrics and Targets

The world continues to face a serious climate challenge, and the UK is taking an active role as a global leader in greenhouse gas emissions reduction.

The Government's net zero strategy includes:

• complete decarbonisation of the electricity sector by 2035;

• 50GW of offshore wind capacity by 2030;

• 70GW of solar PV capacity by 2035;

• 10GW of low carbon hydrogen production capacity by 2030;

• 24GW of nuclear capacity by 2050;

• 4 carbon capture and storage clusters; and

• electrification of transportation (thus increasing demand for electricity).

The Group supports this investment by allowing developers and utilities to recycle their capital, and by demonstrating the attractive long term returns in the industry through its prudent management of wind farms, thereby reducing the cost of capital.

Renewable energy generators avoid CO2 emissions on a net basis at a rate of approximately 0.4t CO2 per MWh. Given the size of the Group's investment portfolio on 31 December 2022, the portfolio's contribution to reducing CO2 emissions is approximately 2.0 million tonnes per annum. The portfolio is also generating sufficient electricity to power 1.8 million homes per annum, at 2.9MWh per home.

The portfolio's Scope 1, Scope 2 and Scope 3 greenhouse gas emissions are disclosed below.

(1) Scope 3 emissions are the result of activities from assets not owned or controlled by the Group, but that the Group indirectly impacts in its value chain. Scope 3 emissions include all sources not within the Group's Scope 1 and 2 boundary and include, inter alia, emissions arising from the construction of each wind farm acquired in the year, including those emissions associated with the manufacturing and transport of all equipment and material, before the wind farm was commissioned, as well as the expected spare part provision throughout its lifetime.

It is the Investment Manager's view that Scope 3 emissions are less meaningful given the Company's strategy of investing in UK wind farms for the duration of their asset lives. Furthermore, recognising a wind farm's construction and whole life operating emissions in the year the Group acquires it is potentially misleading as it both overestimates carbon emissions in the year of acquisition and underestimates carbon emissions generated in every other year.

The carbon payback of a wind turbine, essentially how quickly it offsets the emissions generated during its manufacture, transportation and on-site construction, is an indicator of its contribution to accelerating energy transition. At current rates, carbon payback is typically around 5-6 months for onshore and 8 months for offshore wind farms, which is approximately 3 per cent of the assumed asset life. Carbon footprint indicators are measured in line with the industry standard Greenhouse Gas Protocol based on an equity control approach, meaning emissions from the Group's operations are weighted according to the Group's proportionate ownership of its SPV investments. 

EU Sustainable Financial Disclosure Regulation (SFDR)

The Company became Article 9 qualified under EU SFDR during the year and makes sustainability related disclosures in the financial services sector. Through its Investment Policy of investing in UK wind farms predominately with a capacity over 10MW, the Company contributes to the environmental objective of climate change mitigation that helps to facilitate the transition to a low carbon economy.

Detailed Annex V disclosures and the Company's principal adverse impacts statement can be found in the EU SFDR Disclosures below.

On behalf of the Board

Shonaid Jemmett-Page

Chairman

22 February 2023

Board of Directors

As at the date of this report, the Board comprises 5 individuals from relevant and complementary backgrounds.

During the year and with effect from the conclusion of the 2022 AGM on 28 April 2022, William Rickett C.B. retired from the Board and Lucinda Riches C.B.E. was appointed as Senior Independent Director.

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

Shonaid Jemmett-Page, Chairman (appointed 5 December 2012)

Shonaid Jemmett-Page, (Chairman) FCA (Director), aged 62, 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 Chairman of Cordiant Digital Infrastructure Limited as well as Chairman of its nominations and management engagement committees, Senior Independent Director of ClearBank Ltd and Chairman of its audit and remuneration committees and a member of its nomination and risk committees, non-executive Director of Aviva plc as well as Chairman of its customer and sustainability committee and a member of its nomination and governance, risk and audit committees, and non-executive Director of QinetiQ Group plc and Chairman of its audit committee and a member of its risk and security, remuneration and nomination committees. Until April 2018 she was non-executive Director of GKN plc where she served as Chairman of its audit committee and was a member of its remuneration and nominations committees. Until November 2019 she was non-executive Director of MS Amlin plc where she served as Chairman and was also the Chairman of its remuneration and nominations committees and a member of its risk and solvency committee. Until March 2020 she served as non-executive Chairman and then non-executive Director of MS Amlin Insurance SE (a Belgian subsidiary of MS Amlin plc), and until May 2022 she was a non-executive Director of Caledonia Investments plc where she served as Chairman of its remuneration committee and a member of its governance, nomination and audit committees. She is also the examiner of the UK branch of an Indian children's cancer charity.

Caoimhe Giblin, Chairman of the Audit Committee (appointed 1 September 2019)

Caoimhe Giblin (Director and Audit Committee Chairman), aged 46, has extensive experience in the electricity industry sector and is currently Commercial Director at ElectroRoute, an energy trading company which is part of the Mitsubishi Corporation group of companies.

Prior to that, Caoimhe was Director of Finance for SSE Renewables where she had responsibility for the financial activities of SSE's significant on and offshore wind development and construction portfolio. Prior to this, Caoimhe held various roles in the Corporate Finance department at Airtricity where she gained significant experience of corporate acquisitions and disposals, equity fundraising, project finance, debt financing and managed the company's corporate valuation process. Caoimhe was appointed Head of Corporate Finance of SSE Renewables in 2008 following the acquisition of Airtricity by SSE plc.

Caoimhe qualified as a Chartered Accountant with KPMG and spent the early part of her career focusing on providing corporate finance due diligence, internal audit and risk management services in both Dublin and New Zealand. Caoimhe is a Fellow of Chartered Accountants of Ireland and has a BA in Accounting & Finance and an MBS in Accounting from Dublin City University. Caoimhe also holds a Diploma in Company Direction from the Institute of Directors, of which she is a member. In 2018, Caoimhe was elected to sit on the Wind Energy Ireland Council.

Lucinda Riches C.B.E., Senior Independent Director (appointed 1 May 2019)

Lucinda Riches C.B.E. (Senior Independent Director), aged 61, brings significant capital markets experience, having advised public companies on strategy, fundraising and investor relations for many years. She also brings extensive experience as a public company non-executive director across a variety of businesses, including two FTSE 100 companies.

Lucinda worked at UBS and its predecessor firms for 21 years until 2007 where she was a managing director, global head of Equity Capital Markets and a member of the board of the investment bank. She is Chairman of Peel Hunt Limited and a non-executive Director of Ashtead Group plc. Previously she was a non-executive Director of UK Financial Investments, a non-executive Director of The Diverse Income Trust plc, Senior Independent Director of The British Standards Institution and until 2021 she was a non-executive Director of CRH plc and Senior Independent Director of ICG Enterprise Trust plc. She was awarded a C.B.E. in 2017 for her services to financial services, British industry and to charity.

Martin McAdam (appointed 1 March 2015)

Martin McAdam (Director), aged 61, 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.

Nick Winser C.B.E. (appointed 1 January 2022)

Nick Winser C.B.E. (Director), aged 62, has a 30 year career in the energy sector which included CEO of National Grid across UK and Europe, President of the European Network of Transmission System Operators for Electricity and CIGRE UK Chairman. Nick has been the Chairman of Energy Systems Catapult since 2015 and was appointed Chairman of the Advisory Board for the Energy Revolution ISCF programme in 2018 and served on the Advisory Panel for the Cost of Energy Review in 2017.

Nick is a member of the Institute of Engineering and Technology, serving as its President in 2017/18. Nick maintains a keen interest in the organisation's work and sits on the Nominations & Succession Committee. Nick is also former Chairman of the MS Society and a former member of the Board of the Kier Group.

William Rickett C.B., (appointed 4 December 2012 and retired 28 April 2022)

William Rickett C.B., aged 70, 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. 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, the National Renewable Energy Centre Limited, which helps to develop renewable energy technology, Smart DCC Ltd, the company procuring the shared infrastructure needed for the roll out of smart gas and electricity meters across the country, and Impax Environmental Markets plc, a listed investment trust specialising in the alternative energy, waste and water sectors. William is also a non-executive Director of Harmony Energy Income Trust PLC, a company that invests in commercial scale energy storage and renewable energy generation projects.

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. He was made a Companion of the Order of the Bath in the New Year Honours in 2010.

William retired from the Board with effect from 28 April 2022.

Other UK Listed Public Company Directorships

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

With the exception of Shonaid Jemmett-Page, the Directors have all offered themselves for re-election and resolutions concerning this will be proposed at the 2023 AGM.

Conflicts of Interest

The Directors have declared any conflicts or potential conflicts of interest to the Board 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.

In accordance with Provision 9 of the AIC Code, the appointment of any Director has included consideration of the time they have available to the role. Any additional external appointments will be submitted by Directors to the Board for approval before the appointment is accepted. 

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 2022. 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 2023 AGM. Special resolution 14 will be proposed at the forthcoming AGM seeking renewal of such authority until the next AGM (or 30 June 2024, whichever is earlier). The price paid for the shares will not be less than the nominal value or more than the maximum amount permitted to be paid in accordance with the rules of the UK Listing Authority in force at the date of purchase. This power will be exercised only if, in the opinion of the Directors, a repurchase would be in the best interests of shareholders as a whole. Any shares repurchased under this authority will either be cancelled or held in treasury at the discretion of the Board for future resale in appropriate market conditions.

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

The Directors also recommend shareholders to vote in favour of resolutions 11, 12 and 13, which renew their authority to allot equity securities for the purpose of satisfying the Company's obligations to pay the equity element of the Investment Manager's fee, and also their authority to allot equity securities for cash either pursuant to the authority conferred by resolution 11 or by way of a sale of treasury shares.

Major Interests in Shares

Significant shareholdings as at 10 February 2023 are detailed below.

Significant shareholdings as at 31 December 2022 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:

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

· there exist no securities carrying special rights with regard to the control of the Company;

· the Company does not have an employees' share scheme;

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

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

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

· the Directors' responsibilities pursuant to Section 172 of the Companies Act 2006, as detailed in the Strategic Report.

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 Strategic 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.

Streamlined Energy Carbon Reporting

As the Group has outsourced operations to third parties, there are no significant greenhouse gas emissions to report from the operations of the Group. The Group qualifies as a low energy user and is therefore exempt from disclosures on greenhouse gas emissions and energy consumption. 

The underlying assets of the Group's investee companies are renewable energy generators which avoid CO2 emissions on a net basis (at a rate of approximately 0.4t CO2 per MWh and approximately 2.0 million tonnes per annum given the size of the Group's investment portfolio as at 31 December 2022).

Further details of the portfolio's Scope 1, Scope 2 and Scope 3 greenhouse gas emissions can be found in the Strategic Report.

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

During the year, the Company conducted a formal and competitive audit tender process in line with the requirements of the Statutory Auditors and Third Country Auditors Regulations (SATCAR) for Public Interest Entities (PIEs) to conduct an external audit tender every 10 years. The Directors consider it to be in the best interests of the Company and its Shareholders to 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 2023 AGM.

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

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

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

Annual Accounts

The Board is of the opinion that the Annual Report, taken as a whole, is fair, balanced and understandable and provides the information necessary for shareholders to assess the position, 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 2022 are received and adopted by the shareholders and a resolution concerning this will be proposed at the 2023 AGM.

Dividend

The Board recommended an interim dividend of £44.7 million, equivalent to 1.93 pence per share with respect to the 3 month period ended 31 December 2022, bringing total dividends with respect to the year to £178.9 million, equivalent to 7.72 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

Shonaid Jemmett-Page

Chairman

22 February 2023

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 2023 AGM. At the AGM on 28 April 2022, shareholders voted 99.93 per cent in favour to approve the Directors' Remuneration Report for the year ended 31 December 2021.

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, which is profiled above, consists solely of non-executive Directors and is considered to be 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.

At the AGM on 30 April 2020, shareholders voted 98.25 per cent in favour to approve the Company's Remuneration Policy, which is put to a vote by Shareholders every 3 years. The details of the Company's Remuneration Policy are set out in full below. No changes are expected for 2023 and this policy will next be put to a vote by Shareholders at the 2023 AGM.

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 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. However, in accordance with AIC Code, the Directors are required to be re-elected annually. All of the Directors have been provided with letters of appointment for an initial term of 3 years and for each 3 year term thereafter, which are subject to annual re-election in accordance with the AIC Code. The following table outlines the effective date and expiry date of each of the Directors' current letters of appointment:

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

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

Annual Report on Remuneration

During the year, the basic fee for non-executive Directors increased by £10,000 per annum to £55,000, with effect from 1 January 2022, with the Senior Independent Director and the Audit Committee Chairman receiving an additional £5,000 and £10,000 per annum respectively. The Chairman's basic fee was also increased by £10,000 to £85,000 per annum.

The level of fees for Directors were benchmarked in 2021 by independent consultants, Nurole, as in line with the market. The Company is now the largest independent generator of renewable electricity in the UK. Its GAV has grown to £5.7 billion through acquisitions and equity raisings and, in the last 3 years, the Board and its committees have held 68 meetings.

The Board takes the view that making discretionary payments to Directors for extra work is better for shareholders than a permanent increase in the level of Directors' base fees, however, no discretionary payments were made during the year.

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

(1) The Directors received no additional discretionary payment during the year.

(2) Appointed as Senior Independent Director with effect from 28 April 2022. 

(3) Retired with effect from 28 April 2022.

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

(1) The Directors received an additional discretionary payment from the Company in relation to work incurred in connection with the share placings in February and November 2021.

(1) Movement in individual Director's salary based on annualised total figures, including £10k of additional discretionary payments made in the prior year in connection with share placings.

(2) Appointed as Senior Independent Director with effect from 28 April 2022. 

(3) Appointed to the Board with effect from 1 January 2022. 

(4) Retired with effect from 30 April 2020.

(5) Resigned with effect from 31 July 2019.

Directors' Interests (audited information)

Directors who held office and had interests in the shares of the Company as at 31 December 2022 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 59,570 ordinary shares legally and beneficially owned by her spouse.

Relative Importance of Spend on Pay

The remuneration of the Directors with respect to the year totalled £337,794 (2021: £320,000) in comparison to dividends paid or declared to shareholders with respect to the year of £178,945,737 (2021: £147,998,434), as disclosed in note 8 to the financial statements.

Company Performance

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

On behalf of the Board

Shonaid Jemmett-Page

Chairman

22 February 2023

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's financial statements, and have elected to prepare the Company's financial statements, in accordance with UK adopted international accounting standards and with the requirements of the Companies Act 2006 as applicable to companies reporting under those standards. Under company law the Directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Group and Company and of the profit or loss for the Group for that period. 

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

· select suitable accounting policies and then apply them consistently;

· make judgements and accounting estimates that are reasonable and prudent;

· state whether they have been prepared in accordance with UK adopted international accounting standards, subject to any material departures disclosed and explained in the financial statements;

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

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

The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the company's transactions and disclose with reasonable accuracy at any time the financial position of the company and enable them to ensure that the financial statements comply with the Companies Act 2006. 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.

The Directors are also responsible under section 172 of the Companies Act 2006 to promote the success of the Company for the benefit of its members as a whole and in doing so have regard for the needs of wider society and other stakeholders.

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's financial statements have been prepared in accordance with UK adopted international accounting standards and with the requirements of the Companies Act 2006 as applicable to companies reporting under those standards, 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

Shonaid Jemmett-Page

Chairman

22 February 2023

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.

Purpose, Culture and Values

The Company's purpose remains clear; to provide shareholders 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. 

The Company provides investors with the opportunity to participate directly in the ownership of UK wind farms, so increasing the resources and capital dedicated to the deployment of renewable energy and the reduction of greenhouse gas emissions.

As an investment trust with no employees, the Board have agreed that its culture and values should be aligned with those of the Investment Manager and centred on long term relationships with the Company's key stakeholders and sustainable investment as follows:

· Integrity is at the heart of every activity, with importance being placed on transparency, trustworthiness and dependability.

· The trust of stakeholders is very important to maintain the Company's reputation, particularly for execution certainty for asset sellers and delivery of investment promises to investors.

· Respect for differing opinions is to be shown across all interaction and communication.

· Individual empowerment is sought with growth in responsibility and autonomy being actively encouraged.

· Collaboration and effectively utilising the collective skills of all participants is important to ensure ideas and information are best shared.

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 Shonaid Jemmett-Page, however she has confirmed her intention to retire with effect from the conclusion of the 2023 AGM and will therefore not seek re-election. 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, whilst having served more than 9 years on the Board, Shonaid remains independent as a non-executive Director with a clear division of responsibilities from the Investment Manager.

The Senior Independent Director is Lucinda Riches C.B.E.. Following a rigorous, externally supported selection process, Ms Riches has been selected to succeed Shonaid as Chairman of the Board and Nick Winser C.B.E. will be appointed as Senior Independent Director following the conclusion of the 2023 AGM. The Board has determined that Ms Riches and Mr Winser are independent Directors, in accordance with the provisions of the AIC Code. The Company has no employees and therefore there is no requirement for a chief executive.

The Articles of Association provide that Directors shall retire and offer themselves for re-election at the first AGM after their appointment and at least every 3 years thereafter. However, the AIC Code requires that Directors be subject to an annual election by shareholders, and the Directors comply with this requirement. All of the Directors, other than Shonaid Jemmett-Page, 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 the Directors.

The Company's view is that the continuity and experience of its Directors are important and that a suitable balance needs to be struck with the need for independence and the refreshing of the skills and expertise of the Board. The Company believes that some limited flexibility in its approach to Director rotation and Chair tenure will enable it to manage succession planning more effectively, as set out below. During the year, the Board also commenced a Director recruitment process with the assistance of an external recruitment consultant.

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

Chair Tenure Policy

The Company's policy on Chair tenure is available on the Company website. Mrs Jemmett-Page joined the Company in December 2012, bringing her beyond 9 years of tenure but was appointed as Chairman of the Board in April 2020. The Company's policy on Chair tenure is that the Chairman should normally serve no longer than 9 years as a Director and Chairman but, where it is in the best interests of the Company, its shareholders and stakeholders, the Chairman may serve for a limited time beyond that to help the Company manage succession planning whilst at the same time still address the need for regular refreshment and diversity. In such circumstances the independence of the other Directors will ensure that the Board as a whole remains independent.

Performance and Evaluation

Pursuant to Provision 26 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. During the year, this formal review was conducted by Condign Board Consulting, who were independent from the Board and each of its Directors.

This independent review, which included a review of the Board's culture, concluded that the Board and its committees were committed and appropriately composed to promote the success of the Company. A number of recommendations were made, all of which were embraced by the Board, and certain governance changes were implemented as a result of this review. Other recommendations related to the non-executive Director recruitment process and Chairman succession planning were considered and adopted during the year.

An internal evaluation of the Board, the Audit Committee and individual Directors will be conducted during 2023 in the form of annual performance appraisals, questionnaires and discussions to determine effectiveness and performance in various areas, as well as the Directors' continued independence and tenure. This process will be facilitated by the Company Secretary and the results of this review will be reported in the next Annual Report.

Each individual Director's 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, site visits and specific Board training sessions are arranged involving presentations on relevant topics.

Board Responsibilities

The Board will meet, on average, 5 times in each calendar year for scheduled Board meetings and on an ad hoc basis as and when necessary. At each meeting the Board follows a formal agenda that will cover the business to be discussed. Between meetings there is regular contact with the Investment Manager and the Administrator. The Board requires to be supplied with information by the Investment Manager, the Administrator and other advisers in a form appropriate to enable it to discharge its duties.

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

Committees of the Board

The Company's Audit Committee is chaired by Caoimhe Giblin 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 she does attend Audit Committee meetings as and when deemed appropriate. The Audit Committee Report below describes the work of the Audit Committee.

The Company's Management Engagement Committee comprises all of the Directors and is required to meet at least once per year. The Chairman of the Management Engagement Committee is Shonaid Jemmett-Page. The Management Engagement Committee's 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.

The Management Engagement Committee met once during the year and following consultation with shareholders, the Company agreed certain amendments to the Investment Management Agreement with the Investment Manager, as outlined in note 3 to the financial statements.

Terms of reference for the Management Engagement Committee have been approved by the Board and are available on the Company's website.

The Company's Nominations Committee comprises all of the Directors and is required to meet at least once per year. The Chairman of the Nominations Committee is Shonaid Jemmett-Page. The Nominations Committee's main function is to plan for Board succession and to review annually the structure, size and composition of the Board and make recommendation to the Board with regard to any changes that are deemed necessary. Terms of reference for the Nominations Committee have been approved by the Board and are available on the Company's website.

The Nominations Committee met 4 times during the year to consider Director remuneration and Board succession planning, as well as to commence a Director recruitment process with the assistance of an external recruitment consultant, Heidrick & Struggles.

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 are available on the Company's website. Membership consists of the Chairman (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 AIC Code recommends that companies appoint a Remuneration Committee, however the Board has not deemed this necessary, as being wholly comprised of non-executive Directors, the whole Board considers these matters.

The Investment Manager

The Board has entered into the Investment Management Agreement with the Investment Manager under which the Investment Manager is responsible for developing strategy and the day-to-day management of the Group's investment portfolio, in accordance with the Group's Investment Objective and Investment 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 Management Agreement was amended during the year, which applied a refreshed initial term of 4 years from 1 April 2022 and the Investment Manager's appointment is terminable by the Investment Manager or the Company on not less than 12 months' notice thereafter. This is subject to a reduction to one year's notice if the shares trade below NAV for 6 months or more, on average, during the initial term and a revision to the change of control clause to limit the remaining term for these purposes to a maximum of 2 years.

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 2022 by each Director is set out below:

(1) Resigned with effect from 28 April 2022, at which point 3 scheduled Board meetings and no additional Board meetings had taken place.

The number of meetings of the committees of the Board attended in the year to 31 December 2022 by each committee member is set out below:

(1) Did not attend a Nomination Committee meeting which related to her own potential appointment as Chairman of the Board.

(2) Resigned with effect from 28 April 2022, at which point 2 Audit Committee meetings, no Management Engagement Committee meetings and 1 Nomination Committee meeting had taken place.

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 has a process in place to identify emerging risks, such as climate related risks, and to determine whether any actions are required. 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 Board holds an annual risk and strategy discussion, which enables the Directors to consider risk outside the scheduled quarterly Board meetings. This enables emerging risks to be identified and discussions on horizon scanning to occur, so the Board can consider how to manage and potentially mitigate any relevant emerging risks.

The principal features of the internal controls systems which the Investment Manager and Administrator have in place in respect of the Group's financial reporting are focused around the 3 lines of defence model and 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).

Engagement with Stakeholders

The Company is committed to maintaining good communications and building positive relationships with all stakeholders, including shareholders, debt providers, analysts, potential investors, suppliers and the wider communities in which the Group and its investee companies operate. This includes regular engagement with the Company's shareholders and other stakeholders by the Board, the Investment Manager and the Administrator. Regular feedback is provided to the Board to ensure they understand the views of stakeholders.

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 its registered address. The AGM of the Company also provides a forum for shareholders to meet and discuss issues with the Directors and Investment Manager.

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

The Company values its relationships with its debt providers. The Investment Manager ensures the Company continues to meet its debt covenants and reporting requirements. During the year, the Company drew £200 million of new term debt with AXA, as disclosed in note 13 to the financial statements.

The Investment Manager conducts presentations with analysts and investors to coincide with the announcement of the Company's full and half year results, providing an opportunity for discussions and queries on the Company's activities, performance and key metrics. In addition to these semi-annual presentations, the Investment Manager meets regularly with analysts and investors to provide further updates with how the Company and the investment portfolio are performing.

The Directors and Investment Manager receive informal feedback from analysts and investors, which is presented to the Board by the Company's Joint Brokers. The Company Secretary also receives informal feedback via queries submitted through the Company's website and these are addressed by the Board, the Investment Manager or the Company Secretary, where applicable.

The Company recognises that relationships with suppliers are enhanced by prompt payment and the Company's Administrator ensures all payments are processed within the contractual terms agreed with the individual suppliers.

The Company, via its Investment Manager, has long term and important relationships with its operational site managers and turbine operations and maintenance managers and reviews performance, including health and safety, on a monthly basis. Representatives of the site manager and SPV board directors from the Investment Manager, visit all operational sites on a regular basis and generally carry out safety walks at least once a year on each site. The Board's Health and Safety Director also visits sites at regular intervals.

Similarly, environment protection issues are reported on every month by the site managers and annual habitat management plans are agreed by each SPV board for all sites to ensure that the environment in and surrounding each windfarm is carefully protected.

The Directors recognise that the long term success of the Company is linked to the success of the communities in which the Group, and its investee companies, operate. During the year, a number of community projects were supported by the Group's investee companies.

Key decisions made or approved by the Directors during the year and the impact of those decisions on the Company's members and wider stakeholders is disclosed further in the Strategic Report.

Shareholders may also find Company information or contact the Company through its website.

On behalf of the Board

Shonaid Jemmett-Page

Chairman of the Board

22 February 2023

Audit Committee Report

At the date of this report, the Audit Committee comprised Caoimhe Giblin (Chairman), Martin McAdam, Lucinda Riches C.B.E. and Nick Winser C.B.E.. 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 the Board of Directors section of this 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. The Company's Annual Report complies with the provisions of the Competition and Markets Authority's (CMA) Order.

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

Summary of the Role and Responsibilities of the Audit Committee

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

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

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

Overview

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

· a detailed analysis of the Company's quarterly NAVs;

· reviewing the updated risk matrix of the Company;

· reviewing the Company's corporate governance framework, including climate related reporting disclosures under the TCFD framework;

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

· considering any incidents of internal control failure or fraud and the Company's response;

· considering the ongoing assessment of the Company as a going concern;

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

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

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

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

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

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

Financial Reporting

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

· the quality and acceptability of accounting policies and practices;

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

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

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

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

· considering and recommending to the Board for approval the contents of the annual financial statements and reviewing the Auditor's report thereon including considering whether the financial statements are overall fair, balanced and understandable;

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

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

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

Significant Issues

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

The Group has an accounting policy 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 considered, challenged and 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 rates, 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 principal risks to which the Company is exposed, and recorded them on a risk matrix together with the controls employed to mitigate these risks, and has a process in place to identify emerging risks and to determine whether any actions are required. 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 considers risk and strategy regularly, and formally reviewed the updated risk matrix in Q1 2023 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 are 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 2022 to determine that these were unchanged from those disclosed in the Company's 2021 Annual Report and remained the most likely to affect the Group in the second half of the year.

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

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

Internal Audit

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

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

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

External Auditor

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.

The Audit Committee has a policy regarding the provision of non-audit services by the external Auditor. 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.

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 provision of these non-audit services did not provide threats to the Auditor's independence.

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

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

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 2020 and therefore the lead partner will be required to rotate after the completion of the 2024 year end audit.

The external audit contract is required to be put to tender at least every 10 years. During the year, the Audit Committee conducted a formal and competitive external audit tender process ahead of the audit for the year ending 31 December 2022. The process commenced in early 2022 and a shortlist of suitable audit firms comprising Big 4 and other firms were approached and invited to submit a proposal for consideration. A further shortlist of firms met with the Audit Committee Chairman and their suitability for the engagement was evaluated against comprehensive criteria reflecting experience, independence, audit approach and ESG considerations. Following a comprehensive assessment process and discussions with the Investment Manager, the Board resolved to reappoint BDO LLP as the Company's Auditor. 

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 2023 AGM of the Company.

Caoimhe Giblin

Chairman of the Audit Committee

22 February 2023

Consolidated Statement of Comprehensive Income

For the year ended 31 December 2022

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

Consolidated Statement of Financial Position

As at 31 December 2022