Triodos Renewables Europe Fund

Transcription

1 Triodos Renewables Europe Fund Semi-annual report June 2015 TLIM

2 Energy and Climate For a transition from a carbon-based economy to a sustainable economy, it is essential to reduce energy demand, to use energy as efficiently as possible and to invest massively in renewable energy systems, while switching to low carbon fuels.

3 Triodos SICAV II - Triodos Renewables Europe Fund Semi-annual report June 2015 Triodos Renewables Europe Fund is a Sub-Fund of Triodos SICAV II (Société d Investissement à Capital Variable), which is established in the Grand Duchy of Luxembourg. Triodos SICAV II, including its Sub-Funds, is supervised by the Luxembourg regulator, the Commission de Surveillance du Secteur Financier (CSSF). Triodos Investment Management BV is the external alternative investment fund manager of Triodos SICAV II - Triodos Renewables Europe Fund. Triodos Investment Management BV is incorporated under the laws of the Netherlands and is wholly-owned subsidiary of Triodos Bank NV. Triodos Investment Management BV is supervised by the Dutch regulator, Autoriteit Financiële Markten. The value of investments may fluctuate. Past performance is no guarantee of future results. No subscription can be accepted on the basis of the financial reports. Subscriptions are only valid if they are made on the basis of the latest published prospectus accompanied by the latest annual report and the most recent semi-annual report, if published thereafter. The prospectus is available free of charge at the registered office of Triodos SICAV II in Luxembourg and from Triodos Bank:

4 Key figures (amounts in EUR) 1st half st half Total net asset value (end of reporting period) 59,314,587 59,896,721 61,972,666 58,019,977 65,689,152 Number of R-shares outstanding (end of reporting period) 282, , , ,880 1,991,524 Number of Z-shares outstanding (end of reporting period) 1,728,614 1,760,268 1,765,505 1,247,267 n.a. Number of I-shares outstanding (end of reporting period) 168, , , , ,983 Income 1,198,310 1,187,302 3,160,185 4,703,378 3,282,705 Expenses 838, ,574 1,526,991 1,842,106 1,971,266 Net operating income 359, ,728 1,633,194 2,861,272 1,311,439 Realise and unrealised gains/ losses on investments -350,665 1,328, ,534-6,119,921-3,276,321 Net result 9,258 1,778,777 2,200,728-3,258,649-1,964,882 Ongoing charges per R-Share* 2.95% 3.26% 2.85% 3.06% 3.35% Ongoing charges per Z-Share** 2.45% 2.71% 2.48% 2.51% n.a. Ongoing charges per I-Share* 2.40% 2.54% 2.49% 2.48% 2.76% Net asset value (NAV) per share*** R-cap Z-cap n.a. I-cap Return based on NAV per share*** 6-month return 1-year return 3-year return p.a. 5-year return p.a. Return p.a. since inception R-cap -0.2% 0.5% -2.8% 0.5% 2.3% I-cap 0.1% 1.0% -2.2% 1.1% 2.9% Z-cap **** 0.1% 1.0% -2.5% 0.7% 2.4% * The ongoing charges reflect the total normalised expenses charged to the result, divided by the average net asset value. For the calculation of the average net asset value, each published computation of the net asset value is taken into account. The ongoing charges are calculated over the twelve month period ending at the end of the reporting period. ** This share class was launched in Ongoing charges 2013 are based on best estimate. *** NAV per share is based on share prices as published on June 25, 2015, i.e. the last trading share prices of the reporting period. **** The Z-share class has a limited history. Historic returns are based on the similar R-share class, which has an identical investment policy. 4

5 Report of the Board of Directors Triodos Renewables Europe Fund, established in 2006 as a sub-fund of Triodos SICAV II, enables investors to directly contribute to the growth of renewable energy generation in Europe. Triodos Renewables Europe Fund acknowledges that, although renewable energy is the way forward, reducing energy demand and increasing the efficiency of energy conversion from fossil fuels will be of equal importance in the next few decades. The fund invests in unlisted small- and medium-sized European producers of green power using proven technologies and has a diversified portfolio of wind and solar energy power plants. The fund works with experienced renewable energy project developers and construction and operational management parties to deliver stable returns and bankable projects. At the end of the first half of 2015, Triodos Renewables Europe Fund s total net assets equaled EUR 59.3 million (2014 year-end: EUR 62.0 million) of which 82.3% was invested (at year-end 2014: 79.9%). The portfolio currently consists of 20 projects. In the first half year of 2015, these projects generated green energy equivalent to the energy consumption of approximately 130,000 households and contributed to 82,533 tonnes of CO 2 reduction. Total power generation in the first half of 2015 amounted to 227 MWh. The fund s portfolio valuation in the first half of the year was marked by the adjusted electricity price outlook as a result of global economic trends in the energy market. Market developments Renewable energy is becoming a globally significant source of power 1. Driven by rapid expansion in developing countries, new installations of carbon-free renewable power plants surpassed 100,000 megawatts of capacity for the first time last year 2. The upward trend is based on increasing attention from investors and individuals driving the 1 United Nations Environment Programme report (March 2015) 2 Global Trends in Renewable Energy Investment report (UNEP 2015) demand for renewable energy. It appears that renewable energy is now entering the market at a scale that is relevant in energy industry terms and at a price that is competitive with fossil fuels. The portfolio countries of Triodos Renewables Europe Fund remain attractive markets for both wind and solar opportunities, in a relatively stable environment. The market will continue to evolve, as governments in key markets, such as Germany, the UK and France, are likely to implement important policy changes and the European Union will take decisions that will impact the energy industry for the next 15 years. About 8.7GW of wind and 10.7GW of solar capacity are planned to be installed across Europe this year 3. The market will continue to be policy-driven, but a growing number of projects will be built without any government support. 118,000 households provided with clean energy in 2014 The basic circumstances in Spain are good, given the country s high irradiation levels: the power production of the fund s Spanish assets is in line with or exceeds the budgeted figures. The retroactive adjustments to the support schemes implemented by the Spanish government have been incorporated in the portfolio s valuation. However, despite increased investor activity in the Spanish market, the investment outlook for the fund s Spanish assets remains cautious. The UK is estimated to become the biggest solar market in 2015 with 3.1 GW of additional installations, exceeding both Germany (1.9 GW) 3 IHS and Solarbuzz consultancies 5

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7 WINDPARK WILLEM ANNAPOLDER, NETHERLANDS Windpark Willem Anna-Polder BV is a joint venture of Nuon and Zeeuwind, a private investor and TREF. The wind farm started operations in November of 2002 with 10 NEG-Micon NM 52/900 wind turbines. The wind farm is located in the municipality of Kapelle, the Netherlands. 7

8 and France (1.5 GW). Wind capacity in new onshore wind installations may lag this year. The future for renewable energy in the UK will be determined by the new government elected in May Deployment of renewable energy has grown tremendously; from 8 GW in 2010 to 25 GW in 2015, representing EUR 11 billion in investments. At peak times, renewable energy makes up 19% of the UK s total electricity production. Government policy is firmly focused on keeping consumer prices low and reducing subsidies for new renewable energy projects, which over time should enable the industry to stand on its own feet. Announced changes by the new government to the subsidy schemes and planning rules for new onshore wind capacity could mean that the pipeline of a further GW by 2020 will not be delivered as planned. The fund is carefully monitoring the impact of these changes on its current pipeline of investment opportunities in the UK. The German energy market reacted positively to the reform of the Renewable Energies Act which brought an end to a long period of uncertainty that had slowed development. The reform provides a stable framework for green energy until at least A new policy introduces tenders for ground-mounted solar PV arrays, with a view to potentially scrapping the feed-in tariffs for utility-scale projects. France is also moving towards a greener future, having unveiled its own energy transition plans last year. The country aims to reduce the share of nuclear power on the grid from 75% to 50% and has set an ambitious renewable energy target of 32% by The Climate Conference in Paris (COP21) also provides support to France s renewable energy sector. Other countries where the fund has investments, including Belgium and the Netherlands (see country allocation chart on page 9), continue to have a strong financial position, with ratings varying from AA to AAA. The reduction in subsidies for new projects in both countries supports the fund s view that this is a sign of the improved profitability of renewable energy. Investments As of 30 June 2015, the total net assets of Triodos Renewables Europe Fund equalled EUR 59.3 million, of which 82.3% was invested. The fund has invested in 20 projects throughout Europe. The portfolio comprises solar PV and onshore wind assets. In the first half of 2015, Triodos Renewables Europe Fund continued to build on a strong pipeline of investment opportunities that are in line with the fund s strategy, including wind projects in the UK, the Nordic region and wind and solar in the Netherlands. The fund gained exclusivity on several transactions. Additionally, the fund pursues repowering opportunities in the existing portfolio, to better utilise existing positions and increase the performance of the portfolio companies. Repowering takes place to increase the production capacity of wind and solar farms by implementing new techniques. The main advantage of repowering is that because this concerns existing farms, in most cases fewer or no new licenses need to be applied for. Thus the major development risk of uncertainties due to various (public inquiry) procedures is limited EUR million total net assets by the end of June 2015 The fund also invested in a test turbine at the location of Growind wind farm in the Netherlands and expects the new turbine to be fully operational by the end of this summer. 8

9 The power production of the fund s portfolio on average did not deviate materially from the target in the first six months of The projects are technically performing in line with expectations and above the guaranteed availability. The financial performance of the Spanish projects suffered from the retrospective change in the energy support scheme introduced by the Spanish government. The Spanish assets performed in line with expectations. However, also in line with expectations, they did not contribute to the income of the fund over the first six months of 2015, as all revenues are used to repay debt. The fund continues to closely monitor the specific impact of the amended regime on the Spanish solar assets. The higher risk level resulting from increased volatility of electricity prices, which could justify an increased market premium, is considered to be levelled out by the generally observed lower market return requirements for renewable energy generating assets in Europe (ranging between 5% and 9%). Given the positive risk performance, the favourable outlook and the equity capital return requirements for operational assets, no changes in discount rates have been made. The fund s weighted average portfolio discount rate as at the end of June 2015 is 8.9%. The fund s portfolio was further diversified geographically, thus reducing the risk of adverse regulatory changes affecting portfolio companies, since cash flows generated by the projects are Country allocation (% of portfolio value), June 30, 2015 Belgium 40% Netherlands 29% Spain 12% Germany 10% United Kingdom 5% France 4% Source: Triodos Investment Management largely based on subsidies or feed-in tariffs paid by national governments. As per 30 June 2015, the solar portfolio accounts for 55.5% of the fund s portfolio and the wind portfolio represents 44.5 % of the total. Compared to wind and biomass, solar assets provide more stable cash flows on an annual basis. The cash flows from wind energy projects are slightly less predictable because of greater fluctuations in the amount of wind per year. Nonetheless, in the long run, wind revenues are expected to be in line with long-term projections. Sector breakdown (% of portfolio value), June 30, 2015 Solar 55,5% Wind 44,5% Source: Triodos Investment Management Results Financial results Triodos Renewables Europe Fund closed its first half year 2015 with a net operating gain of EUR 0.4 million (2014 full year: EUR 1.6 million). EUR 1.2 million (2014 full year: EUR 3.0 million) was generated from dividends and interest in the first half of 2015, which reflects the maturity of the portfolio (with projects that have all reached the operational phase) and the generally good performance of its investments. Return Since the fund s inception the retail share classes (R-Shares and Z-Shares) have generated an average annual return of 2.3% and 2.4%, respectively. The 6-month return over the first half of 2015 was -0.2% 9

10 Return based on NAV per share* 6-month return 1-year return 3-year return p.a. 5-year return p.a. Return p.a. since inception R-cap -0.2% 0.5% -2.8% 0.5% 2.3% I-cap 0.1% 1.0% -2.2% 1.1% 2.9% Z-cap ** 0.1% 1.0% -2.5% 0.7% 2.4% * NAV per share is based on share prices as published on 25 June 2015, i.e. the last price at which shares were traded in the reporting period. ** The Z-share class has a limited history. Historic returns are based on the similar R-share class, which has an identical investment policy. Source: RBC Investor Services Bank S.A. and Triodos Investment Management for R-Shares and 0.1% for Z-shares (first half year 2014: 2.8% and 3.1% respectively). The institutional share class (I-Shares) has generated an average annual return of 2.9% since inception and gained 0.1% in the first six months of 2015 (first half year 2014: 3.1%). The long-term performance lags behind the target return of 5-7%, despite the strong operational performance of the projects. The operational performance of the portfolio companies was in line with the targets set for the first half of The low return was mainly due to the impact of the electricity prices on the share price. Liquidity The fund s liquidity position changed from 20.9% (per 31 December 2014) to 18.5% as per 30 June The fund strives to retain a liquidity level of around 10% to facilitate the liquidity requirements of investors. Costs The fees Triodos Renewables Europe Fund pays for support services, distribution activities and investment services are the main cost elements. The investment manager, Triodos Investment Management, is responsible for the investment process, portfolio management and close monitoring of the portfolio companies. As Triodos Renewables Europe Fund provides risk capital for non-listed, smaller project companies, this is a labour-intensive process. Triodos Renewables Europe Fund s ongoing charges, which include the management fee, amounted to 2.95% for R-Shares, 2.45% for Z-Shares and 2.40% for I-Shares as per 30 June 2015, (2014: 2.85%, 2.48% and 2.49%, respectively). More detailed information on management fees and ongoing charges can be found on pages 24 and 26. Risks Investments in Triodos Renewables Europe Fund are subject to several risks, which are described in detail in the fund prospectus. Some of the risks are highlighted below. Liquidity risk Triodos Renewables Europe Fund invests in assets that are not listed on a stock exchange or traded on a regulated market. The investments are relatively illiquid. In view of the fund s open-end structure (enabling subscription and redemption of shares on a weekly basis) this could potentially lead to a situation in which the fund needs to temporarily 10

11 close for redemptions. There is also a risk that the fund may be unable to obtain sufficient liquidity to fulfil its financial obligations. This risk is mitigated by keeping a sufficient percentage of its assets in cash or cash equivalents. Additionally, the fund is allowed to borrow up to 20% of its total net assets. Regulatory risk / country risk Many of the project company related contracts, such as the Power Purchase Agreements, subsidy agreements, green and/or renewable energy certificates, carbon offset arrangements, etc., are subject to government regulation and may change over time. Fluctuations in global energy and oil prices may influence the Power Purchase Agreements and project revenues. The value of the investments may also be affected by other uncertainties in the form of abrupt changes in domestic tax policies and other legislation and regulations. Triodos Renewables Europe Fund mitigates regulatory risks by means of geographical and technological diversification. Project risk A long-term risk is constituted by the fact that the amount of electricity produced is determined by various uncertain factors, such as wind speed, rainfall and sunlight. Added to that, there is a technology risk (e.g. actual performance of turbines and solar panels) that could affect the amount of electricity produced. Where the fund invests in projects that are not yet operational, it is also exposed to a construction risk at the project level. The performance of the project also depends on the quality of the plant management. This risk is mitigated by working with experienced developers and by using knowledgeable advisors to determine the expected electricity production and plant performance. Valuation risk As the sub-fund invests almost exclusively in assets that are not listed on any stock exchange, or traded on a regulated market, its investments may not have readily available prices and may be difficult to value. In order to determine the value of these investments, the sub-fund will employ a consistent, transparent and appropriate evaluation methodology, based on the International Private Equity and Venture Capital Valuation Guidelines (IPEV), as published by the IPEV Board and endorsed by the European Private Equity and Venture Capital Association (EVCA). To the extent that this methodology relies on periodic market-based data and peer group comparisons, the valuation of the sub-fund assets may fluctuate with the variations in such data. In addition, there is no guarantee that the valuations applied at the time of investment will allow for the build-up of business value or provide returns for investors. Interest rate risk The performance of Triodos Renewables Europe Fund is susceptible to capital market interest rates. This is due to the valuation method, which involves calculating the net present value of expected cash flows, using a discount factor that incorporates the one-year rolling average market interest rate. In principle, rising interest rates will have a negative impact and falling interest rates will have a positive impact on the valuation of underlying investments. The positive impact of decreasing interest rates is capped, however, as the valuation method incorporates a minimum discount rate. Outlook The operational portfolio is expected to perform in line with expectations and operates in a wider energy sector environment. This environment depends on a set of developments ranging from regulatory amendments to electricity price adjustments. Triodos Renewables Europe Fund aims to continue growing its portfolio, as the increase in demand for investments in renewable energy power assets experienced in the first six months of 2015 is likely to continue. The fund sees ample growth potential for repowering assets in the current portfolio. Triodos 11

12 Renewable Energy Fund has made strategic allocation changes for development opportunities and will closely monitor the opportunities in the existing portfolio. Triodos Renewables Europe Fund will continue assessing investment opportunities in proven renewable technologies located in Europe. A strong pipeline of opportunities has been built, including solar projects and onshore wind projects in the Netherlands, the UK and the Nordic regions. The fund will continue to focus on investments with a good financial, environmental and social performance, such as the solar industrial roof top projects, which help the industrial hosts to manage production costs and thus secure employment. Luxembourg, August 27, 2015 The Board of Directors of Triodos SICAV II Pierre Aeby (Chair) Marilou van Golstein Brouwers Patrick Goodman Olivier Marquet Garry Pieters 12

13 General information Triodos Renewables Europe Fund was launched in June 2006 as a sub-fund of Triodos SICAV II, the first Luxemburg investment fund launched by Triodos Bank. The fund has an open-end fund structure and is not quoted on any stock market. Triodos Renewables Europe Fund has euro share classes for retail and for institutional investors. Triodos SICAV II consists of three sub-funds: Triodos Renewables Europe Fund, Triodos Microfinance Fund and Triodos Organic Growth Fund. Triodos SICAV II publishes an integrated, detailed and audited report annually in Luxembourg. Triodos SICAV II further publishes an integrated, detailed and unaudited semi-annual report in Luxembourg. Separate reports for each sub-fund of Triodos SICAV II are published by Triodos Investment Management. Copies may be obtained free of charge by any person at the registered office of Triodos SICAV II and from Triodos Bank: The prospectus of Triodos Renewables Europe Fund can be obtained free of charge at Triodos Bank, or at local distributors. Risk profile All investments in the sub-funds of Triodos SICAV II are exposed to a variety of risks. The sub-funds generally invest in risk-bearing, most often non-listed assets that cannot be made liquid in the short term. In most cases, added value in the sub-funds is generated over the longer term. Thus, investments in a sub-fund of Triodos SICAV II require a medium- to long-term investment horizon of the investor. In general, the sub-funds will only take on risks that are deemed reasonable to achieve their investment objectives. The sub-funds have different investment strategies and therefore different risk profiles. There is no guarantee that the sub-funds will achieve their goals, due to market fluctuations and other risks to which the investments are exposed. Risk management Triodos Investment Management has implemented an integral risk management framework, a comprehensive valuation framework and a liquidity management policy framework. The comprehensive risk management framework is implemented in order to adequately monitor and manage the risks related to the sub-funds (as determined in the sub-funds Particulars in the prospectus of Triodos SICAV II). This risk management framework is based on the COSO (The Committee of Sponsoring Organisations of the Treadway Commission) framework for integral risk management, and furthermore contains policies and procedures designed in accordance with European regulations and, best market practices. A permanent, independent risk management function is in place, in compliance with the AIFMD. Valuation framework The comprehensive valuation framework is implemented to ensure a sound, independent, comprehensive and appropriate use of valuation methodologies and procedures. This framework sets out general requirements regarding the selection, the implementation and the application of valuation methodologies and techniques for all asset types, taking into account the different nature of asset types and the accompanying market practices in the valuation of these assets. In addition, this framework sets out the requirements for or with regard to the valuation function at the fund level. It ensures consistent procedures regarding the selection, implementation and application of valuation methodologies and, moreover, ensures a consistent approach of the valuation function, valuation committees and the use of external valuers at the fund level. 13

14 Liquidity management Given the special liquidity characteristics of the investments, the risk management function has a specific liquidity (risk) management policy framework applicable to the sub-funds, in accordance with European regulations and best market practices, to ensure that liquidity risk is appropriately measured, monitored and managed at sub-fund level. The framework contains policies and procedures to: Ensure the availability of sufficient liquidity to meet financial obligations and adequately manage excess liquidity to act in the best interest of investors in the sub-funds. Investors should carefully take note that given the type of assets, there is no guarantee that there are sufficient funds to pay for the redemption of shares of the sub-fund and there is no guarantee that the redemption can take place at the requested date. Assess the risk of insufficient liquidity by regularly conducting tests under normal and exceptional (stress test) liquidity conditions. Provide adequate escalation measures in case of liquidity shortage or distressed situations (liquidity contingency plan). Ensure the coherence of the sub-funds investment strategy, their liquidity profile and their redemption policy. Triodos Investment Management has implemented standardised methods to monitor the liquidity position of the sub-funds and to assess near-future developments regarding liquidity, including early warning parameters. The liquidity position of the sub-funds is monitored at both the sub-fund level and the Investment Manager level. Specific risk factors for the sub-funds As the sub-funds differ significantly in their investment policy and associated risks, it is important to study the specific risk factors for each sub-fund. 14

15 Statement of net assets as per June 30, 2015 (amounts in EUR) Notes June 30, 2015 December 31, 2014 June 30, 2014 Assets Fixed assets Investment in financial assets 2 48,841,642 49,512,724 49,250,635 Historic cost: EUR 47,167,805 as at June 30, 2015; EUR 47,488,244 as at December 31, 2014; EUR 46,465,617 as at June 30, 2014) Current assets Cash and cash equivalents 10,960,274 12,982,720 11,079,207 Interest receivable 2 5,763 Subscriptions receivable 139, ,301 Other receivable 13,501 13,501 13,501 Other current assets 5,146 5,013 5,013 Total assets 59,820,563 62,653,789 60,486,420 Liabilities Liabilities due within one year Investment management, distribution and service fees payable 5 302, , ,060 Redemptions payable 256, ,515 Accounts payable and accrued expenses 8 203, , ,124 Total liabilities 505, , ,699 Net assets 59,314,587 61,972,666 59,896,721 The accompanying notes form an integral part of these financial statements. The figures shown in these financial statements have not been subjected to an external audit. 15

16 Statement of operations for the period ended June 30, 2015 (amounts in EUR) Notes 1st half year, st half year, 2014 Income Dividend income 2 756,089 1,411, ,713 Interest on loans 2 404,367 1,577, ,571 Bank interest 6,146 13,135 18,897 Other income 6 31, ,452 48,121 Total income 1,198,310 3,160,185 1,187,302 Expenses Investment management, distribution and service fees 5 615,534 1,214, ,551 Administrative and custodian fees 4 60, ,026 66,753 Audit and reporting expenses 17,253 44,061 17,134 Subscription tax 3 13,490 27,276 13,833 Other tax 1,930 10,168 1,925 Other expenses 7 129, ,106 35,378 Total expenses 838,387 1,526, ,574 Net operating gain/(loss) 359,923 1,633, ,728 Realised loss on investments (1,882,442) (1,882,353) Change in net unrealised appreciation on investments 2,4449,976 3,210,402 Change in net unrealised depreciation on investments (350,665) Net increase/(decrease) in net assets resulting from operations 9,258 2,200,728 1,778,777 The accompanying notes form an integral part of these financial statements. The figures shown in these financial statements have not been subjected to an external audit. 16

17 Statement of changes in net assets for the period ended June 30, 2015 (amounts in EUR) 1st half year, st half year, 2014 Operations Net operating gain/(loss) 359,923 1,633, ,728 Realised loss on investments (1,882,442) (1,882,353) Change in net unrealised appreciation on investments 2,449,976 3,210,402 Change in net unrealised depreciation on investments (350,665) Net increase/(decrease) in net assets resulting from operations 9,258 2,200,728 1,778,777 Capital transactions Capital subscriptions R Share Class 787,311 2,018, ,499 I Share Class 209,774 3,632, ,789 Z Share Class 2,529,383 18,853,782 15,883,548 Total subscriptions 3,526,468 24,504,355 16,831,836 Capital redemptions R Share Class (197,002) (17,027,758) (13,852,691) I Share Class (2,494,153) (21,687) (3,043 Z Share Class (3,502,650) (5,702,949) (2,878,135) Total redemptions (6,193,805) (22,752,394) (16,733,869) Net increase/(decrease) in net assets resulting from capital transactions (2,667,337) 1,751,961 97,967 Net assets Net assets at the beginning of the period/year 61,972,666 58,019,977 58,019,977 Total increase in net assets (2,658,079) 3,952,689 1,876,744 Net assets at the end of the period/year 59,314,587 61,972,666 59,896,721 The accompanying notes form an integral part of these financial statements. The figures shown in these financial statements have not been subjected to an external audit. 17

18 Cash flow statement for the period ended June 30, 2015 (amounts in EUR) Cash provided by operating activities 1st half year, st half year, 2014 Profit/(loss) after taxation 9,258 2,200,728 1,778,777 (-) increase/(+) decrease in unrealised gains and losses on investments and forward foreign exchange contracts 350,665 (2,449,976) (3,210,402) (+) increase/(-) decrease in receivables and other assets (132) 56,322 50,558 (+) increase/(-) decrease in payables 81,161 (318,871) (340,501) Net cash provided by operating activities 440,952 (511,797) (1,721,568) Cash provided by financing activities (+) proceeds from shares issued 3,666,299 24,414,731 16,749,741 (-) decrease from shares redeemed (6,450,113) (22,541,326) (16,592,596) Net cash provided by financing activities (2,783,814) 1,873, ,145 Cash provided from investing activities (-) acquisitions of financial assets 320,416 1,573,681 2,596,199 Net cash used by investing activities 320,416 1,573,681 2,596,199 Cash Net increase/(decrease) in cash and cash equivalents (2,022,446) 2,935,289 1,031,776 Cash at the beginning of the period/year 12,982,720 10,047,431 10,047,431 Cash at the end of the period/year 10,960,274 12,982,720 11,079,207 The accompanying notes form an integral part of these financial statements. The figures shown in these financial statements have not been subjected to an external audit. 18

19 Statement of changes in the number of shares outstanding for the period ended June 30, st half year, st half year, 2014 Number of Shares outstanding at the beginning of the period/year Share Class R 263, , , Share Class I 238, , , Share Class P Share Class Z 1,765, ,247, ,247, Subscriptions over the period/year Share Class R 25, , , Share Class I 6, , , Share Class P Share Class Z 96, , , Redemptions over the period/year Share Class R 6, , , Share Class I 77, Share Class P Share Class Z 133, , , Number of Shares outstanding at the end of the period/year Share Class R 282, , , Share Class I 168, , ,253 Share Class P Share Class Z 1,728, ,765, ,760,

20 Statistics (amounts in EUR) June 30, 2015 December 31, 2014 June 30, 2014 Total net asset value at the end of the period/year Share Class R 8,621,627 8,054,633 9,802,173 Share Class I 5,399,385 7,667,077 4,333,143 Share Class P Share Class Z 45,293,541 46,250,922 45,761,371 59,314,587 61,972,666 59,896,721 Net asset value per share at the end of the period/year Share Class R ,43 Share Class I ,83 Share Class P ,54 Share Class Z ,00 The accompanying notes form an integral part of these financial statements. The figures shown in these financial statements have not been subjected to an external audit. 20

21 Notes to the financial statements 1. General Triodos SICAV II (the SICAV ) has been incorporated under the laws of the Grand Duchy of Luxembourg as a société d investissement à capital variable (SICAV) under the form of a société anonyme on April 10, 2006, for an unlimited period. Triodos SICAV II is governed by Part II of the Luxembourg Law of December 17, The SICAV is an alternative investment fund ( AIF ) subject to the requirements of the Directive 2011/61/EU of June 8, 2011, on Alternative Investment Fund Managers Directive ( AIFD ) as implemented in Luxembourg through the law of July 12, 2013, on alternative investment fund managers (the Law of 2013 ). The Registered Office of the SICAV is established at 11/13, Boulevard de la Foire, L-1528 Luxembourg. The Articles have been deposited with the Chancery of the District Court of Luxembourg on April 27, 2006, and published in the Mémorial C, Recueil des Sociétés et Associations (the Mémorial ). The SICAV has been registered with the Companies Register of the District Court of Luxembourg under number B The Articles were last amended at the extraordinary general meeting of shareholders held on October 16, 2014, and published in the Mémorial. The SICAV is structured as an umbrella fund, which provides both institutional and retail investors with a variety of Sub-Funds, each of which relates to a separate portfolio of assets permitted by law and managed within specific investment objectives. As at June 30, 2015, the SICAV has three Sub-Funds: Triodos Renewables Europe Fund, Triodos Microfinance Fund and Triodos Organic Growth Fund. The overall objective of Triodos Renewables Europe Fund is to offer investors an environmentally sound investment in renewable energy projects with the prospect of an attractive financial return combined with the opportunity for the investors to make a pro-active, measurable and lasting contribution to the development of sustainable energy sources. The first net asset value was calculated on July 27, Shares in the sub-fund may be subscribed once a week, on the business bay preceding the valuation date. The sub-fund is semi open-ended, i.e. shares may be redeemed in principle once a week on the business day preceding the valuation date. However, the SICAV is entitled to (temporarily) stop trading and thus the execution of the redemption applications received, if trading is not possible, in accordance with the stipulations of the prospectus. The shares are divided into Shares of Classes R, Z, I, P. Class R Shares and Class Z Shares are open to any investor. Class I Shares is restricted to Institutional Investors. Class P Shares is open to entities of Triodos Group. Class P gives the right, in accordance with the Articles, to propose to the general meeting of shareholders a list containing the names of candidates for the position of director of the SICAV from which a majority of the directors of the SICAV must be appointed. Currently, all shares issued are of the capitalisation type. Therefore, the sub-fund does not pay dividends to its shareholders as realised profits are reinvested by the sub-fund. The sub-fund Triodos Renewables Europe Fund incorporated Triodos S II LuxCo S.à r.l. ( the holding company ) in February As a wholly-owned subsidiary of the sub-fund, all assets and liabilities, income and expenses of the holding company are consolidated in the statement of net assets, the statement of operations and the statement of changes in net assets of the sub-fund. All investments held by the holding company are disclosed in the financial statements of the sub-fund. 21

22 The financial year end of the SICAV is end of December each year. Triodos SICAV II, including its sub-funds, is supervised by the Luxembourg supervisory authority, the Commission de Surveillance du Secteur Financier (CSSF). Triodos SICAV II, including its sub-funds, is also registered with the Dutch Supervisory authorities, the Autoriteit Financiële Markten (AFM). 2. Summary of significant accounting principles Investments are valued at their fair value. The fair value is determined as follows: (a) The valuation of private equity investments (such as equity, subordinated debt and other types of mezzanine finance) are based on the International Private Equity and Venture Capital Valuation Guidelines, as published from time to time by the European Venture Capital Association (EVCA), and is conducted with prudence and in good faith. The private equity and subordinated debt investments are valued on the basis of discounted cash flows. Other assets are valued according to the following rules: (b) Senior debt instruments, invested in/granted to companies not listed or dealt in on any stock exchange or any other Regulated Market, are valued at fair market value, deemed to be the nominal value, increased by any interest accrued thereon; such value is adjusted, if appropriate, to reflect the appraisal of the Advisor of the relevant Sub-Fund on the creditworthiness of the relevant debtor. The Board of Directors uses its best endeavors to continually assess this method of valuation and recommend changes, where necessary, to ensure that debt instruments are valued at their fair value as determined in good faith by the Board of Directors. (c) The value of money market instruments not listed on any stock exchange or dealt in on any other Regulated Market and with a remaining maturity of less than 12 months is deemed to be the nominal value thereof, increased by any interest accrued thereon. (d) The value of securities which are admitted to official listing on any stock exchange is based on the latest available price or, if appropriate, on the average price on the stock exchange which is normally the principal market of such securities, and each security dealt on any other Regulated Market is based on the last available price. In the event that this price is, in the opinion of the Board of Directors, not representative of the fair market value of such securities, for example in the case of illiquid securities and/or stale prices, the directors value the securities at fair market value according to their best judgment and information available to them at that time. (e) Units or shares of open-end UCIs are valued at their last official net asset values, as reported or provided by such UCI or their agents, or at their last unofficial net asset values (i.e. estimates of net asset values) if more recent than their last official net asset values, provided that due diligence has been carried out by the relevant Advisor, in accordance with instructions and under the overall control and responsibility of the Board of Directors, as to the reliability of such unofficial net asset values. (f) The liquidating value of futures, forward or options contracts not admitted to official listing on any stock exchange or dealt on any other Regulated Market means their net liquidating value determined, pursuant to the policies established prudently and in good faith by the Board of Directors, on a basis consistently applied for each different variety of contracts. 22

23 (g) The value of any cash at hand or on deposit, bills and demand notes and accounts receivable, prepaid expenses, cash dividends declared and interest accrued, and not yet received are deemed to be the full amount thereof, unless, however, the same is unlikely to be paid or received in full, in which case the value thereof is determined after making such discounts as the Board of Directors may consider appropriate to reflect the true value thereof. (h) Swaps, as far as credit swaps are concerned, are valued at fair market values as determined prudently and in good faith by the Board of Directors. Cross-currency interest rate swaps are valued on the basis of the prices provided by the counterparty. (i) All other securities and assets are valued at fair market value as determined in good faith pursuant to procedures established by the Board of Directors. (j) Placements in foreign currency are quoted in euro s with due observance of the currency exchange rates most recently known. (k) Realised and non-realised changes in the value of investments are incorporated in the profit and loss account. (l) The principle for determination of profit is based on the attribution of income and expenses to the relevant period. The income from payments of profit on equity participations is accounted for in the year in which they are made payable. Prepaid costs and costs still to be paid are taken into account in determining the expenses. (m) Other assets and liabilities are recorded at nominal value after deduction of any provision in respect of anticipated non-recovery. (n) The costs of investments expressed in currencies other than EUR are translated into EUR at the exchange rate prevailing at purchase date. (o) Interest income is accrued pursuant to the terms of the underlying investment. Income is recorded net of respective withholding taxes, if any. (p) Gain and losses arising from un-matured forward foreign exchange contracts are determined on the basis of the applicable forward exchange rates at the valuation date and are booked in the profit and loss accounts. (q) Dividend income is recognised on cash basis, net of any withholding taxes. (r) Equity investments of Triodos SICAV II are excluded from consolidation due to exemptions by temporary holding, size and time window. 3. Taxation According to the law in force and current practice, the SICAV is not subject to any Luxembourg tax on income and capital gains nor are dividends paid by the SICAV subject to any Luxembourg withholding tax. However, each of the SICAV s sub-funds is subject to a subscription tax (taxe d abonnement) at an annual rate of 0.05% p.a. Such rate may be decreased to 0.01% p.a. for certain sub-funds or classes of shares which are restricted to Institutional Investors as specified in the relevant sub-fund particulars. This tax is calculated and payable quarterly on the basis of the net asset value of each sub-fund at the end of each quarter. This tax is not due on that portion of the SICAV s assets invested in other Luxembourg UCIs. 23

24 In addition, the issue of Shares in the SICAV is not subject to any registration duties or other taxes in Luxembourg. 4. Administrative and custodian fees The Depositary and Paying Agent, the Administrative Agent, the Domiciliary and Corporate Agent and the Registrar and Transfer Agent are entitled to receive fees in accordance with usual practice in Luxembourg and payable monthly. The administrative and depositary fees comprise the following: (amounts in EUR) 1st half year, st half year, 2014 Domiciliary agency fee 6,907 14,795 7,420 Administrative fee 29,945 53,021 25,293 Transfer agency fee 16,669 42,488 25,470 Depositary fee 7,384 14,723 8,570 Total 60, ,027 66, Investment management, distribution and service fees For the services it provides, the Alternative Investment Fund Manager is entitled to an annual fee payable quarterly and calculated as described in the relevant sub-fund s particulars. The sub-fund pays for the provision of investment management services and supporting services and the distribution activities an annual fee of 2.50% for Class R Shares, an annual fee of 1.95% for Class Z Shares, Class I Shares and Class P Shares, calculated on the relevant Class net assets, accrued weekly and payable quarterly. The costs for marketing and distribution activities related to retail investors and attributable to Class R Shares, will only be borne by Class R Shares and will be part of the management fee. The costs for marketing activities incurred by the Investment Manager related to retail investors and attributable to Class Z Shares will only be borne by Class Z Shares and may amount to maximum 0.20% (on an annual basis) of this Share Class net assets. 24

25 6. Other income The other income comprises the following: (amounts in EUR) 1st half year, st half year, 2014 Arrangement fees 129,252 33,128 Redemption fees 31,708 29,200 14,993 Total 31, ,452 48, Other expenses The other expenses comprise the following: (amounts in EUR) 1st half year, st half year, 2014 Supervisory fee (CSSF) 2,000 2,000 2,000 Remuneration of the Board of Directors/Manager* 10,000 16,667 10,000 Legal fees 8,998 16,854 10,716 Consulting fees (616) 10,094 (4,550) Bank fees 11,362 25,369 10,030 Portfolio transaction costs 71,458 Other expenses 26,073 35,122 7,182 Total 129, ,106 35,378 * Amounts include the remuneration of the Board of Managers of the sub-fund s holding company Triodos S II LuxCo S.à r.l. 8. Accounts payable and accrued expenses As per June 30, 2015, the accounts payable and accrued expenses mainly include the following expenses: administrative fees, audit fees, consulting fees, depositary fees, domiciliary agency fees, legal fees, subscription tax and transfer agency fees. 9. Off-balance sheet commitments As per June 30, 2015 the Sub-Fund has committed to invest in the following companies: Client Country To disburse (CUR) Fieva Belgium EUR 1,500,000 25

26 10. Off-balance sheet contingent assets Windpark Zeeland I, in which the fund has a stake of 40%, is involved in a protracted dispute with net operator Delta Netwerkbedrijf B.V. over the tariffs of the connection to the grid of its Jacobahaven location, which it considers to be too high. In June 2015, the Dutch Supreme Court has validated this claim and decided that Delta Netwerkbedrijf B.V is liable for the subsequent damage. The case has been transferred to the Court of Appeal for a final decision. A damage compensation payment by Delta Netwerkbedrijf B.V to Windpark Zeeland I B.V. could have a positive impact on the value and return of the fund. Detailed information is available on Ongoing charges cost ratios 12 months ending June 30, months ending December 31, months ending June 30, 2014 Share Class I 2.40% 2.49% 2,54% Share Class P 1.71% 1.74% 1, 90% Share Class R 2.95% 2.85% 3,26% Share Class Z 2.45% 2.48% 2.71% The ongoing charges reflect the total normalized expenses charged to the result, divided by the average net asset value. For the calculation of the average net asset value, each computation and publication of the net asset value is taken into account. The ongoing charges are calculated over the twelve month period ending at the end of the reporting period. 12. Exchange rate The exchange rate used as per June 30, 2015 is: 1 EUR = GBP 13. Other information As at June 30, 2015, Patrick Goodman and Pierre Aeby both hold shares in Triodos Renewables Europe Fund. The other members of the Board of Directors do not hold shares in Triodos Renewables Europe Fund. 26

27 Management and administration Board of Directors Pierre Aeby Chair Chief Financial Officer and member of the Executive Board of Triodos Bank NV Marilou van Golstein Brouwers Managing Director of Triodos Investment Management BV Patrick Goodman Independent, Partner of Innpact S.à r.l. Olivier Marquet Managing Director of Triodos Bank NV (Belgian branch) Garry Pieters Independent, Associate The Directors Office Luxembourg Fund Manager As per 1 July 2014 Matthew Clayton has taken up the role as Fund Manager of Triodos Renewables Europe Fund. In addition he fulfills of Executive Director of Triodos Renewables plc. Matthew Clayton has an extensive track record in the field of renewable energy. He has worked in the Triodos Renewables plc team since 2006 and undertakes the management of Triodos Renewables plc and leads the project development, construction and operation of its portfolio. As at 30 June 2015, the fund manager does not hold shares in Triodos Renewables Europe Fund. Alternative Investment Fund Manager Triodos Investment Management B.V. Utrechtseweg 60 P.O. Box 55, 3700 AB Zeist The Netherlands Distributor Triodos Investment Management B.V. Utrechtseweg 60 P.O. Box 55, 3700 AB Zeist The Netherlands Registered Office 11-13, Boulevard de la Foire, L-1528 Luxembourg Grand Duchy of Luxembourg Custodian, Paying Agent, Domiciliary, Corporate and Administrative Agent RBC Investor Services Bank S.A. 14, Porte de France, L-4360 Esch-sur-Alzette Grand Duchy of Luxembourg Registrar and Transfer Agent RBC Investor Services Bank S.A. 14, Porte de France, L-4360 Esch-sur-Alzette Luxembourg Cabinet de révision agréé KPMG Luxembourg, Société Coopérative 39, Avenue John F. Kennedy, L-1855 Luxembourg Grand Duchy of Luxembourg Legal Advisor in Luxembourg Arendt & Medernach 14, rue Erasme, L-2082 Luxembourg Grand Duchy of Luxembourg Rated by: The Luxembourg Fund Labelling Agency (LuxFLAG) is an independent, non-profit association. The Agency, founded in 2006, aims to promote the raising of capital for Responsible Investment sectors by awarding a recognisable label to investment funds. Its objective is to reassure investors that the applicant investment fund invests, directly or indirectly, in the responsible investment sector. The applicant fund may be domiciled in any jurisdiction that is subject to a level of national supervision equivalent to that available in European Union countries. 27

28 Investing in renewable energy In times of economic recovery climate change and the energy query must remain a key part of the public debate. Addressing climate change, energy security, and access to energy in the developing world, will remain next to global food and water availability key challenges for the next decades. Given existing and emerging technologies, and the availability of capital despite the recent financial downturn, transitioning towards a low carbon economy is possible. But it requires a concerted effort from governments, many different organisations and businesses, and producers and consumers alike. The financial sector is and should play a central role. Investment decisions must not be guided anymore by short-term financial interests. Instead, they should combine long-term financial, environmental and social considerations. And they should be rooted in an authentic vision which is aligned with, but not dependent on, government policies. However, the government has the ability to steer the financial sector towards a proactive and catalytic role in the transitioning to a sustainable energy economy. The transition to a low carbon economic future requires an investment strategy based on three major drivers: reduced demand for energy, massive installation of renewable energy systems and switching to low carbon fuels. Triodos Bank lends to and invests in renewable energy generation and energy saving. It does so on a local scale where possible, and on a large scale where projects are in balance (energy subsidiary). 28

29 Colophon Triodos SICAV II - Triodos Renewables Europe Fund semi-annual report June 2015 Published August 2015 Text Triodos Investment Management, Zeist, The Netherlands Design Michael Nash Associates, London, United Kingdom Layout Via Bertha, Utrecht, The Netherlands Printing Drukkerij Pascal, Utrecht, The Netherlands Photography Photos in this semi-annual report haven been provided by companies in which Triodos SICAV II - Triodos Renewables Europe Fund invests. If you have comments or questions about this report, please contact Triodos Bank. This document can be downloaded from: 29

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