Triodos Renewables AGM A summary of the topics of discussion at the Annual General Meeting, held in Bristol on 19 June 2015.

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2 Triodos Renewables AGM 2015 A summary of the topics of discussion at the Annual General Meeting, held in Bristol on 19 June

3 Table of Contents 1. Summary of AGM Official Business 2. Operations and financial updates 3. Shareholder questions from the AGM 2

4 Agenda Registration and lunch Official part of AGM Presentations from the Management Team and Board Refreshment break Guest speaker presentation Dr Andrew Garrad 1700 Close 3

5 AGM Official Business Triodos Renewables Board Simon Roberts (Chairman) Matthew Clayton (Executive Director) Ann Berresford Peter Weston Katie Gordon Colin Morgan Triodos Corporate Officer (represented by Charles Middleton) 4

6 AGM Official Business Resolutions ordinary business Resolution 1: Approval of minutes Resolution 2: Receive Annual Report and Accounts Resolution 3: Agreement to payment of dividend Resolution 4: Re-appointment of Colin Morgan as Director Resolution 5: Re-appointment of Triodos Corporate Officer Limited as Director Resolution 6: Appointment of Deloitte LLP as Auditors 5

7 AGM Official Business Resolutions ordinary business Resolution 7: Directors authority to allot shares in the Company up to an aggregate nominal amount of 10,890, Resolution 8: Directors authority to allot shares in the Company up to an aggregate nominal amount of 10,890, as if no preemption rights existed Resolution 9: Approval of the terms of the buy back contracts and execution of the same 6

8 7 Close of AGM official business

9 Operations and financial updates Videos of recently constructed sites, shared at the meeting 8

10 Operations and financial updates Triodos Renewables Management Team Matthew Clayton (Executive Director) Katrina Cross (Finance Director) Monika Paplaczyk (Senior Investment Manager) Adrian Warman (Operations Manager) Karen Pugh (Assistant Accountant) Alex Connor (Investor Relations) Sarah Barnett (Shareholder Relations Co-ordinator) 9

11 Production up 18.6%, 32,000 homes Shareholder community up 16%, to 5,800 Further 3 wind farms commissioned in 2015, forecast production up 20% 10

12 Operations and financial update TR energy generation and impact 200,000 (Generation MWh, Homes Equivalent) 180, , , , ,000 80,000 60,000 40,000 20,000 Clayfords Auchtygills Boardinghouse March Ransonmoor (Fenpower) Avonmouth Eye Dunfermline Kessingland Wern Ddu Caton Moor Ness Point Sigurd Haverigg II Beochlich Homes Equiv f 2016f 11

13 Operations and financial update Health and safety: No reportable incidents on our Operational sites during 2014, but one incident occurred in February 2015 during the construction of in Boardinghouse wind farm* Production: 134,480MWh (18.6 % increase from 2013), 32,080 homes equivalent Availability: Average 98% for our newest sites representing 85% of generation. Including our 4 oldest sites, the revenue weighted availability was 93%. Insurance claims have allowed partial cost recovery O&M: Addressing performance 12

14 Operations and financial update 2014 Financial Analysis Statutory profit and loss Turnover 12,433 10,104 8,255 Operating Profit 4,316 3,567 2,311 Net interest payable (2,756) (1,977) (1,587) Gain on investments/share of associates Profit/(loss) before tax 1,659 1, Operating capacity (MW) 53.60MW 44.85MW 37.65MW Generation in year (MWh) 134,480MWh 113,345MWh 93,760MWh 13

15 Operations and financial update 2014 Financial Analysis Balance sheet Fixed assets 78,443 67,073 56,036 Cash 8,071 10,690 8,238 Other current assets 7,113 6,530 6,112 Bank and other loans (51,578) (45,622) (30,293) Other creditors (7,243) (7,276) (9,822) NET ASSETS 34,806 31,395 30,271 Gearing 65.8% 68.0% 54.1% Average borrowing cost (at year end) 6.00% 6.03% 5.69% NB: Gearing is calculated as the proportion of assets funded by loans 14

16 Operations and financial update 2014 financial highlights (1 of 2) Directors recommended 4p dividend, payable in July (yield of 2% depending on time of share purchase) Directors recommended share price increased to 2.34 based on an updated valuation as result of the purchase of further shares in Boardinghouse Windfarm, and the successful commissioning of three new wind farms (capital appreciation of 19p or 9% last 12 months) Increased capacity once all assets operational to 64.1 MW (15% growth) Share issue raised 4.1m, welcoming 813 new shareholders (16% growth in shareholder community) 15

17 Operations and financial update 2014 financial highlights (2 of 2) Actual buy back in 2014 was 61,200 of shares at Extension of Buy-back policy whereby proceeds from the 2014 share issue can be used to acquire shares unsold for one year at a 10% discount to share issue price. If approved, 2015 buy back is 288,117 shares at

18 Operations and financial update Financial returns (1 of 3) * Directors recommended share price 2.50 TR Share Price* ( )

19 Operations and financial update Financial returns (2 of 3) * Directors recommended share price 14.0% 12.0% TR Shareholder Returns* 10.0% 8.0% 6.0% 4.0% 2.0% 0.0% Dividend Yield Annualised Returns (IRR) 18

20 Operations and financial update Financial returns (3 of 3) Environment plus social impact 7% of overall turnover directly into local economies Protecting local jobs by providing merchant partner with cheaper green electricity 19

21 Operations and financial update Share trading Matched bargain market Since January 2013 shares have been traded on the matched bargain market run by Capita Ethex provide a shop window with info about Triodos Renewables Edison Research provided external valuation showing higher than our prudent methods Focused on improving transparency and liquidity or secondary market for shares Extension of buy back in 2015 (subject to approval). If approved, 2015 buy back is 288, 117 shares at

22 Operations and financial update 2015 update (1 of 2) Positive start to the year Boarding house, Clayfords and Auchygills all generating Generation up 8% on 2014 and 4% on 2015 target First investment with share issue proceeds made (Boardinghouse additional shares) 2015 requirement to adopt new accounting principles Currently prepared under UK Generally Accepted Accounting Principles (UK GAAP) Now International Financial Reporting Standards (IFRS) This will see changes in accounting for certain elements including (business acquisitions, taxation and financial instruments) transition will require substantial work and explanation and could affect results 21

23 Operations and financial update 2015 update (2 of 2) Current project to prepare for changes Review of dividend policy and recommended share valuation to take account of this and market changes Half year reporting will provide an operational update 22

24 Operations and financial report Market update Government change to Renewables support does not impact existing projects upon which Company value is based Renewables contribution overtakes nuclear Impact of fall in oil price Introduction of capacity market Transition from ROC to FiT CfD 2030 targets require double today s renewable electricity 23

25 Operations and financial update Impact Building new renewable capacity Carbon and energy pay back, 3-6 months 1/3 of our sites are industrial/brown field sites Community - funds and open days Local impact using local contractors for construction and operation wherever possible Generation equal to offsetting 57,826 tc0 2 (9.9 tco 2 per average shareholding of 3,600 shares) Once our 2015 projects are built, our average shareholder s investment generates enough renewable electricity for their own and 6 neighbours homes 24

26 Operations and financial update Community events - Avonmouth open day Read more here 25

27 Operations and financial update Going forward Continue to improve performance Exclusivity on two Scottish wind farms Repowering, feasibility work initiated on oldest sites Respond to evolving regulatory framework Community projects developing complimentary finance products Evaluate alternative sustainable asset backed opportunities 26

28 Operations and financial update 20 th Anniversary 900 million kwh of renewable electricity delivered so far 180, , , , ,000 80,000 60,000 40,000 20,000 - Impact f TR share price and dividend f Production MWh Homes Equivalent Dividend (pence) Share Price ( ) 27

29 28 Thank you Any questions?

30 Shareholder questions from the AGM How will the Government s announcement on the withdrawal of subsidies for onshore wind projects effect Triodos Renewables? On 18 June 2015, Department of Energy & Climate Change announced that it plans to close Renewables Obligation for new onshore wind projects on 1 April 2016, a year earlier than planned. Only projects which have secured grid connection offers, planning consent and land rights will be able to secure a grace period during which it will still be able to qualify for Renewables Obligation Certificates (ROCs) beyond this date. New primary legislation will be introduced with details of the closure. The Government also announced that it wishes to review the Feed in Tariff (FIT) scheme later this year and as part of this review, to seek options at how community projects are being funded. The existing projects in our portfolio will not be impacted by the Government s decision as the Company s projects have already qualified for ROCs. This decision may however impact on our future investment strategy. In the next 12 months Triodos Renewables will only consider onshore wind projects which will qualify for either ROC, FIT or CFD (Contract for Difference). We will also continue to consider the variety of investment opportunities which exist in sustainable energy. These options include the sale of electricity directly to local industry, community projects and further consideration of technologies such as hydro-electric, solar pv, energy efficiency and demand side management. Decisions will continue to be made in line with the objectives of achieving the greatest impact, taking acceptable risk and maximising shareholder returns. We also hope that the Government will continue their commitment to renewables and that the Contract for Difference scheme will still be opened for onshore wind projects. The UK Government remains committed to achieving its green house gas emission reduction targets, onshore wind remains the cheapest way to deliver these targets. The onshore wind sector also represents a very significant employer in the UK. Continued support of onshore wind will provide the UK with the cheapest means of achieving its green house gas emission reduction targets. We will continue to contribute to cleaning up the UKs energy system, but this latest step may slow progress of the sector and ultimately cost the country more as we underutilise one of the countries greatest natural resources. 29

31 Shareholder questions from the AGM What proportion of shares in the Company are held by institutional investors? Approximately 25% of the Company s shares are held by Institutional investors. A Socially Responsible Investment Fund, who purchased additional shares following the recent share issue, is the largest shareholder and own 7.5% of the shares. How long should auditors remain with the Company? We consider a review every 5 years to be appropriate, and a change in auditor should take place every 10 years. What is the A share? Stichting Triodos Holding own the A share in Triodos Renewables. The A share exists to safeguard the Company s mission and ethos. The A share has the power to prevent certain resolutions. Full detail can be found on page 38 of the 2014 Annual Report. Are there plans to allot more shares in the future and what safeguards are in place to protect the value of existing shares if the share capital of the Company were to double? Currently there are no plans to allot additional shares in the Company this year. It is the fiduciary duty of the Board to protect shareholders interests and shareholders place their trust in the Board to do this. Historically we have allotted shares to allow the growth in Triodos Renewables to increase the green electricity generation and income potential of the Company. 30

32 Shareholder questions from the AGM Resolutions 7 & 8 refer to the authority to allot shares in the Company up to a nominal amount of 10,890,094.50, which would be doubling the current share capital. Is this figure sensible as this would substantially dilute existing shareholdings? The Board and team will review this figure in the resolutions equivalent to 7 and 8 for the next AGM. In the terms of the draft buy back contract the word substantially is used. Please explain the usage of this word. The contracts provided with the AGM pack are draft contracts, as at the time of sending we do not have all the final details of the final sellers and volumes, as they have a right to withdraw their participation in the buy back prior to the final legally binding contracts being drawn up. The terms will remain constant, but the contracts will be updated with the details for each eligible shareholder. Was the Greenvale (March) site chosen because the Company is a good partner to work with, or because the site is windy? A combination of both. The site benefits from a good wind regime. Greenvale have implemented other environmental projects including a solar pv installation and grey water recycling. The turbine on the Greenvale potato factory site provides green electricity to the factory at a discounted price to what they would pay from the national grid. This allows them to manage their costs and continue to improve their environmental performance. 31

33 Shareholder questions from the AGM Excluding the new projects, if the other project s generation is averaged out, generation appears to be down from last year. What happens to the older sites when they stop functioning as efficiently (for example Beochlich, where there have been several faults)? We have experienced some operational issues (major component failures) in 2014 on our older sites. In addition to aiming to improve their performance, we are considering the option of repowering some of our older sites that have started to show their age, where the performance could be enhanced with more advanced technology. Do you expect to have better results with your newer turbines? Is the technology improving? Yes the reliability of technology is improving. In addition to this, due to growth in the sector, the more modern machines have a better spare parts supply chain. We are working with specialist operations and maintenance contractors to improve the performance of the older machines and we ve made good progress in identifying sources of spare parts. We now routinely benefit from year operational performance warranties from the manufacturers which also contributes to improved reliability. Did insurance provide cover for lost revenue when there were faults with the sites? Yes. We made a number of claims under our operations all risk insurance last year, both for the cost of parts and repair and the lost output during the period of operational down time. In addition to seeking warranties from operations and maintenance contractors we maintain operations all risk insurance cover for all assets to mitigate performance risk. 32

34 Shareholder questions from the AGM How obliged are network operators to take account of our needs? There are regulations which require the network operators to provide a connection. However, this is not prescriptive on timing and cost. The grid connection process is often expensive and can take an extended period. The renewables industry both requires and is contributing to a much more flexible grid as we move from a centralised to de-centralised energy system. There are some innovative approaches now being adopted. Do you have a maximum level of debt that you consider to be prudent? At the Triodos Renewables group level we have 65% gearing. At an individual project level, we tend to have between 70% and 80% gearing at the beginning of operations. As the assets mature, the level of gearing will fall. At the group level we wouldn t expect to maintain gearing higher than it is presently. We take on debt with the intention of allowing our shareholder s investment to contribute to more renewable energy capacity and also to increase long term returns. Can you explain what mezzanine finance is? Mezzanine debt is also called sub-ordinated debt. In terms of security and risk, this debt ranks behind the senior debt provided by banks, but before equity. Why is the Company paying 6% for debt when interest rates have been so low recently? We fix the interest rate of the majority of our debt to avoid exposure to changed in interest rates. Much of our debt is provided over 5 to 15 years. In this medium to long term context 6% is competitive. 33

35 Shareholder questions from the AGM How many shares are traded on the Matched Bargain Market? Over the past year, 129,949 shares have been traded on the MBM. The MBM is currently operated by Capita. We have discussed ways to improve the share trading process with Capita. We aim to amend the share trading execution process with a view to increasing share trading liquidity. Additionally the list of trades for sale will be available on the new Triodos Renewables website that will launch in later this year; instructions will be clearer; the execution policy for trading will be refined and simplified. We aim to continue to provide more information to allow shareholders to realise the value of the their shareholding. Why is the Company adopting IFRS (International Financial Reporting Standards)? This is a regulatory requirement for the Company and will help to future proof the Company s financial reporting. We will be using Deloitte to assist us with the transition to IFRS, to keep the continuity throughout the transition process. As part of the process we will adjust both the 2013 and 2014 accounts according to IFRS standards. We still plan to produce half year reports for shareholders under IFRS, but they will not include as much detailed financial information due to the increased time it will take to provide this information. The half year reports will be more focused on operational performance. We will still include Profit & Loss information in the half year report. We understand that shareholders value the half-yearly update and aim to continue to provide this non-statutory communication. 34

36 Shareholder questions from the AGM Regarding the Notes on page 34 of the Annual Report - could the current Company structure be simplified? The structure of the Company is dictated by the way we finance and contract each asset/project company. This structure provides the group with flexibility and protection in the event of the failure of an asset/project company. Would there be any benefit to diversifying into solar pv? The cost of solar pv technology has materially reduced over the last 3 years. This technology can now deliver electricity at sustainable prices. We will be considering solar pv projects going forward as part of a more diversified portfolio. We are also considering investments in hydro assets and qualifying the opportunity to invest into energy efficiency and demand side management. We aim to maintain the current risk and return profile by continuing to invest in asset backed opportunities using proven technologies. Will there be an impact on the Company if Scotland were to become Independent? We can t predict what will happen should Scotland go independent, but we do have a spread of projects throughout the UK. 35

37 Shareholder questions from the AGM A big thank you to our shareholders 36

38 Triodos Renewables This presentation is issued by Triodos Renewables plc Registered office c/o Triodos Bank, Deanery Road, Bristol, BS1 5AS. Triodos Renewables is managed by Triodos Bank NV. 37