TIDMTRIG
RNS Number : 4711R
Renewables Infrastructure Grp (The)
27 October 2023
27 October 2023
The Renewables Infrastructure Group Limited
"TRIG" or "the Company", a London-listed investment company
advised by InfraRed Capital Partners ("InfraRed") as Investment
Manager and Renewable Energy Systems ("RES") as Operations
Manager.
Net Asset Value - Q3 2023
TRIG announces that its estimated unaudited Net Asset Value as
at 30 September 2023 is 131.0 pence per share, a decrease of 1.2
pence per share to the Company's last announced Net Asset Value as
at 30 June 2023, principally due to an increase in the portfolio
weighted average discount rate to 8.1%.
Earnings for the quarter were 0.6 pence per share. An interim
dividend of 1.795 pence per share was paid in the quarter and the
Company remains on track to pay the target dividend for the full
year 2023 of 7.18 pence per share*.
Operational cash flows across the portfolio remain strong and
for the full year 2023 are expected to be c. GBP500m*, being c.
3.0x gross cash cover over the Company's 2023 target dividend (i.e.
before the repayment of portfolio-level debt). Portfolio level debt
repayments for the year are scheduled to total c. GBP200m. The
Company's net dividend cover for the year (after the portfolio debt
repayments) is expected to be c. 1.6x.
The key drivers of the movement in Net Asset Value per share in
the quarter are summarised in the table below with further details
following:
Net Asset Positive Negative
Value (pence Movements Movements
per share)
NAV per share at 30 June 2023 132.2p
-------------- ----------- -----------
Q3 generation & power prices compared
to forecasts (0.3)p
-------------- ----------- -----------
Q3 Inflation and foreign exchange
movements 0.7p
-------------- ----------- -----------
Increase in forecast power prices 0.4p
-------------- ----------- -----------
Portfolio weighted average discount
rate i ncreased by +20bps (2.0)p
-------------- ----------- -----------
NAV per share at 30 September 2023** 131.0p
-------------- ----------- -----------
* Past performance is not a reliable indicator of future
results. There can be no assurance that targets will be met or that
the Company will make any distributions, or that investors will
receive any return on their capital. Capital and income at
risk.
**NAV per share at 30 September 2023 presented after unwind of
the discount rate, company costs and payment of the dividend, which
in aggregate sum to net nil impact.
Q3 generation & power prices compared to forecasts
Underlying financial performance in the period was slightly
below budget, mainly reflecting lower than expected energy
resource. The portfolio-wide energy yield continued to benefit from
diversification with below budget German offshore wind generation
offset by above budget UK wind generation. Other markets were
broadly in-line with expectations. Power prices were close to
budget.
Operational performance remains good, and the Operations Manager
continues to progress technical and operational value
enhancements.
Q3 inflation and foreign exchange movements
The movement in the period reflected foreign exchange gains on
euro denominated investments as sterling weakened during the
quarter. This was slightly offset by inflation which was marginally
lower in the period than forecast.
Over the next 10 years, 56% of the Company's forecast revenue
per unit of generation is directly indexed to inflation. Market
implied inflation expectations in the UK are c. 0.75% higher than
TRIG's long-term inflation assumptions. If these market implied
inflation expectations were to be reflected in TRIG's UK inflation
assumptions, portfolio-wide return expectations would increase by
c. 0.6% (noting that UK investments represent 57% of TRIG's
portfolio, by value).
Increase in forecast power prices
Power price forecasts have marginally increased across the
duration of the blended curve.
Over the next ten years, 67% of the Company's forecast revenues
per unit of generation are fixed through government contracts or
long-term power purchase agreements. TRIG continues to adopt the
cannibalisation assumptions of power price forecasters.
Active management
On 21 August 2023, TRIG announced the disposal of three onshore
wind farms in Ireland. This transaction has now been completed,
raising gross proceeds of GBP22m at a 26% premium to carrying
value. The Investment Manager is evaluating further disposals to
support portfolio construction objectives and to continue to reduce
borrowings under the Group's revolving credit facility ("RCF").
Construction and development stage projects continue to progress
well:
-- The Ryton battery storage project in the UK reached the Final
Investment Decision (FID) stage in the quarter with operational
takeover expected during 2025.
-- At the Drakelow battery storage project in the UK,
infrastructure design is underway with FID expected in early
2024.
-- At the Ranasjö and Salsjö wind farm projects in Sweden,
towers have been erected for 38 of the 39 turbines with eight
turbines now in the commissioning phase.
-- The Managers continue to progress further development stage
investments including those organically generated such as
repowering and co-location, as well as two further battery storage
projects.
Portfolio weighted average discount rate
During the period, the Company secured a sale of assets at a
significant premium to NAV, whilst transactions across the wider
renewables and infrastructure marketplace also seem to indicate
that valuations remain resilient. The Investment Manager notes that
long-term government bond yields have increased further in the
period across the geographies in which TRIG operates.
Balancing these two factors, we have increased valuation
discount rates applied in the UK and EU by 0.2%. This brings the
total increase in applied valuation discount rates to 1.8% in the
UK and 0.8% in the EU over the last 12 months. The portfolio
weighted average discount rate has increased to 8.1%, meaning the
implied portfolio discount rate premium to 10-year government bond
yields at 30 September 2023 was 4.2%.
Capital allocation
Proceeds from the disposal of assets together with
internally-generated cash flows in excess of Company costs and
dividends paid to shareholders have been applied since 30 June 2023
to reduce the Company's revolving credit facility balance by GBP40m
to GBP370m.
The Company's investment commitments, which are expected to be
fully funded from internally-generated cash flows, relate to the
construction of two onshore windfarms in Sweden and two battery
storage projects in the UK, totalling nearly 300MW generation or
storage capacity. Each of these projects have return expectations
that are significantly higher than the portfolio average, serve to
further diversify the portfolio and drive long-term value for
shareholders.
It remains the priority of the Board and Managers to pay an
attractive, resilient dividend to shareholders, fulfil existing
investment commitments and reduce RCF drawings. Beyond these
priorities, excess cash flows may also be applied to accretive
investment opportunities, which may include share buybacks
particularly at prevailing share price levels.
Enquiries
InfraRed Capital Partners Limited +44 (0) 20 7484 1800
Richard Crawford
Phil George
Minesh Shah
Mohammed Zaheer
Brunswick +44 (0) 20 7404 5959 / TRIG@brunswickgroup.com
Mara James
Investec Bank Plc +44 (0) 20 7597 4000
Lucy Lewis
Tom Skinner
Denis Flanagan
BNP Paribas +44 (0) 20 7595 9444
Virginia Khoo
Carwyn Evans
The Company
The Renewables Infrastructure Group ("TRIG" or the "Company") is
a leading London-listed renewable energy infrastructure investment
company. The Company seeks to provide shareholders with an
attractive long-term, income-based return with a positive
correlation to inflation by focusing on strong cash generation
across a diversified portfolio of predominantly operating
projects.
TRIG is invested in a portfolio of wind, solar and battery
storage projects across six countries in Europe with aggregate net
generating capacity of over 2.8GW; enough renewable power for 1.9
million homes and to avoid over 2.4 million tonnes of carbon
emissions per annum. TRIG is seeking further suitable investment
opportunities which fit its stated Investment Policy.
Further details can be found on TRIG's website at
www.trig-ltd.com .
Investment Manager
InfraRed Capital Partners is an international infrastructure
investment manager, with more than 190 professionals operating
worldwide from offices in London, New York, Sydney and Seoul. Over
the past 25 years, InfraRed has established itself as a highly
successful developer and custodian of infrastructure assets that
play a vital role in supporting communities. InfraRed manages
US$14bn+ of equity capital(1) for investors around the globe, in
listed and private funds across both income and capital gain
strategies.
A long-term sustainability-led mindset is integral to how
InfraRed operates as it aims to achieve lasting, positive impacts
and deliver on its vision of Creating Better Futures. InfraRed has
been a signatory of the Principles of Responsible Investment since
2011 and has achieved the highest possible PRI rating(2) for its
infrastructure business for seven consecutive assessments, having
secured a 5 star rating for the 2021 period. It is also a member of
the Net Zero Asset Manager's Initiative and is a TCFD
supporter.
InfraRed is part of SLC Management, the institutional
alternatives and traditional asset management business of Sun Life.
InfraRed represents the infrastructure equity arm of SLC
Management, which also incorporates BentallGreenOak, a global real
estate investment management adviser, and Crescent Capital, a
global alternative credit investment asset manager.
www.ircp.com
(1) Data as at Q4 2022. Equity Capital is calculated using a
5-year average FX rate.
(2) Principles for Responsible Investment ("PRI") ratings are
based on following a set of Principles, including incorporating ESG
issues into investment analysis, decision-making processes and
ownership policies. More information is available at
https://www.unpri.org/about-the-pri
Operations Manager
TRIG's Operations Manager is RES (" Renewable Energy Systems"),
the world's largest independent renewable energy company.
RES has been at the forefront of wind energy development for
over 40 years, with the expertise to develop, engineer, construct,
finance and operate projects around the globe. RES has developed or
constructed onshore and offshore wind, solar, energy storage and
transmission projects totalling more than 23GW in capacity. RES
supports over 12GW of operational assets worldwide for a large
client base. Headquartered in Hertfordshire, UK, RES is active in
11 countries and has over 2,500 employees engaged in renewables
globally.
RES is an expert at optimising energy yields, with a strong
focus on safety and sustainability. Further details can be found on
the website at www.res-group.com .
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