Net Asset Value - Q2 2024
2 August 2024
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 - Q2 2024
TRIG announces an estimated unaudited Net Asset Value ("NAV") per share as at 30 June 2024 of 123.4 pence, a decrease of 1.6 pence per share from the Company's last announced NAV as at 31 March 2024. This reduction in NAV principally reflects below budget generation and downward movement in project-level revenue forecasts, mitigated by the expected profit on the disposal of a partial stake in Gode offshore wind farm which was signed after the period end.
The TRIG Board reaffirms that the Company remains on track to pay the target dividend for FY 2024 of 7.47 pence per share1.
The Board and Managers continue to emphasise responsible management of TRIG's balance sheet to create greater capacity for future investment activities. Significant progress has been made towards reducing floating rate borrowings under the Company's Revolving Credit Facility ("RCF") through the application of sale proceeds from asset disposals, with transactions signed over the past 12 months providing aggregate proceeds of £210m at an average 11% premium to carrying value.
Given the significant progress made in respect of TRIG's capital allocation priorities and the attractive investment opportunity presented by TRIG's shares trading at a significant discount to the Company's Net Asset Value, the Board announced on 1 August 2024 that it has allocated up to £50m to a 12-month share buyback programme that will commence following the release of the 2024 Interim Results later this month.
The key drivers of the movement in NAV per share over the quarter are summarised in the table below:
|
|
Net Asset Value (pence per share) |
Positive Movements |
Negative Movements |
|
NAV per share at 31 March 2024 |
125.0p |
|
|
|
Q2 Portfolio generation |
|
|
(0.8p) |
|
Divestment activity |
|
0.3p |
|
|
Q2 Inflation and foreign exchange movements |
|
|
(0.4)p |
|
Changes to revenue forecasts |
|
|
(0.7)p |
|
NAV per share at 30 June 20242 |
123.4p |
|
|
Q2 portfolio generation
In aggregate, generation in the period was below forecast due to:
- Third-party owned cable outages at two UK offshore wind farms, Hornsea One and East Anglia 1. The outage at Hornsea One has now been resolved. Remedial works have been scheduled for East Anglia 1 and commercial protection is in place for future losses relating to this outage;
- Lower weather resource in some regions, particularly in Sweden; and
- High hydro levels in Spain significantly increasing the incidence of negative price events during which the Company's Cadiz projects curtailed generation. Participation in ancillary services insulated the Valdesolar project from this H1 2024 effect.
In the quarter, the Ranasjö and Salsjö onshore wind farms in Sweden were both commissioned, adding 121MW net capacity to TRIG's portfolio, further strengthening and diversifying the Company's revenues.
Inflation and foreign exchange movements
Across the markets TRIG invests in, headline inflation has been coming down from the highs of 2022-2023 to levels generally at or around central bank targets. Inflation is expected to continue to slow and the forecast UK inflation for full year 2024 used by the Company in the valuation of the portfolio has been reduced slightly.
Net movement of foreign exchange during the quarter had nil impact on the Company's NAV.
Changes to revenue forecasts
During the quarter, the significant movements in project-level revenue forecasts were:
- Wholesale power prices (+0.2p per share in the quarter): Power price forecasts increased during the quarter, with short-term pricing recovering some of the reductions seen in Q1 as forecast gas prices increased. The recovery in pricing in Sweden and Spain was less than in other markets due to sustained higher-than-average hydro reserves.
- Guarantees of origin certificate pricing (-0.5p per share in the quarter): Pricing of European Guarantees of Origin certificates, in particular, has fallen back from recent highs as elevated hydro reserves in Sweden and Spain have impacted supply levels.
- Batteries valuation adjustment (-0.3p per share in the quarter): An adjustment has been made to the carrying value of the development-stage battery projects purchased by TRIG in 2022 following a reduction in battery revenue forecasts.
Note: the above does not sum to the (0.7p) impact shown in the table above due to rounding differences.
1 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.
2 NAV per share at 30 June 2024 presented after unwind of the discount rate, company costs and payment of the first quarterly interim dividend.
Enquiries
InfraRed Capital Partners Limited +44 (0) 20 7484 1800
Minesh Shah
Phil George
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
BNP Paribas +44 (0) 20 7595 9444
Virginia Khoo
Carwyn Evans
Notes
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 2.8GW; enough renewable power for 1.9 million homes and to avoid 2.3 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 160 professionals operating worldwide from offices in London, New York, Sydney, Seoul and Madrid. 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$13bn+ of equity capital1 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 rating2 for its infrastructure business for seven consecutive assessments, having secured a 5-star rating for the 2023 period3. 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.
Further details can be found on InfraRed's website at www.ircp.com
1 Uses 5-year average FX as at 31st March 2024 of GBP/USD of 1.2839; EUR/USD 1.1179. EUM is USD 12.927bn
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
3 In the 2023 Principles for Responsible Investment ("PRI") assessment, InfraRed achieved a 5 star rating for the Policy Governance and Strategy and Infrastructure and a 4 star rating for the newly created Confidence Building Measures. Please find InfraRed's report available for download on our website here: https://www.ircp.com/sustainability/
Operations Manager
TRIG's Operations Manager is RES ("Renewable Energy Systems"), the world's largest independent renewable energy company.
RES is the world's largest independent renewable energy company, working across 24 countries and active in wind, solar, energy storage, biomass, hydro, green hydrogen, transmission, and distribution. An industry innovator for over 40 years, RES has delivered more than 24GW of renewable energy projects across the globe and plans to bring more than 22GW of new capacity online in the next five years.
As a service provider, RES has the skills and experience in asset management, operations and maintenance (O&M), and spare parts - supporting 41GW of renewable assets across 1,300 sites. RES brings to the market a range of purposeful, practical technology-based products and digital solutions designed to maximise investment and deployment of renewable energy. RES is the power behind a clean energy future where everyone has access to affordable zero carbon energy bringing together global experience, passion, and the innovation of its 4,500 people to transform the way energy is generated, stored and supplied.
Further details can be found on the website at www.res-group.com.
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